GST anti-profiteering authority slaps penalty on Garnier’s distributor for not passing benefits to consumer

gst-in.jpg

NAA has also asked the distributor to explain why the penalty should not be imposed.

The National Anti-Profiteering Authority (NAA) has slapped a penalty worth Rs 3.43 lakh plus some amount of interest on a Delhi-based distributor of Garnier Laboratories on grounds of not passing the benefit of GST rate cuts to consumers.

Apart from Rs 3.43 lakh fine, the quasi-judicial body also asked the distributor to pay 18 percent interest from the date of collection of the higher tax till the date of return of such amount.

The distributor has also been asked to deposit the total amount within three months to the state and Central Consumer Welfare Fund, as mentioned in GST-related law.

Based on a complaint received, NAA has alleged that the base price of the product — hair colour in this case — was increased to retain the MRP despite a reduction in tax rate by the Goods and Services Tax (GST) Council back in November 2017.

In November 2017, the GST Council had slashed tax rate of the product to 18 percent from 28 percent.

NAA’s final judgement said that the benefit of the rate cut was not passed on to the consumer.

“It is established that out of the 388 products, the base prices of 293 products were increased by him inspite of rate reduction to maintain the pre-rate reduction rate. Accordingly, the respondent has charged increased base prices on the above products, thus indulging in profiteering,” NAA said.

NAA has also asked the distributor to explain why the penalty should not be imposed.

The distributor said that MRP and base price, both were fixed by Garnier’s parent company L’oreal through its software and does not have any role to play in fixing product prices.

Under the GST-related laws, the government has introduced an anti-profiteering clause to ensure that businesses transfer the benefit of input tax credit to the consumers by ‘commensurate reduction in prices’.

If this is not done, the NAA can then impose a penalty, cancel the registration of the supplier or return the amount of benefit not passed on, along with an interest of 18 percent, depending on the details of the case.

The framework of the anti-profiteering mechanism comprises a standing committee, screening committees in every state as well as the Directorate General of Safeguards, now renamed as DG anti-profiteering (DGAP).

If consumers feel that the benefit of a rate cut is not being passed on to them, they can directly approach the state’s screening committee for relief. Once DGAP completes the investigation, the case is then sent to NAA, which issues the final order.

Complaints started pouring in after the GST Council cut rates of over 200 items across various slabs in November 2017. The rate rationalisation continued earlier this year in January, July and lately in December.

Source : https://www.moneycontrol.com/news/business/gst-anti-profiteering-authority-slaps-penalty-on-garniers-distributor-for-not-passing-benefits-to-consumer-3333091.html

Leave a Reply

Your email address will not be published.

Solve this and then Post Comment *

scroll to top