The Directorate General of Anti-profiteering (DG-AP) has found Nestlé India guilty of indulging in profiteering of over ₹ 100 crore.

Known for its packaged food brands such as Maggi, Kitkat and Nescafe, among others, the company was facing allegations of profiteering after rate of GST was lowered on over 175 products with effect from November 15, 2017. It was alleged that the company has not passed the benefit of rate reductions to the consumers.

The matter was investigated and the DG-AP found the allegation true in certain products, which a senior Government official confirmed to BusinessLine .

The DG-AP is entrusted to investigate the matter and submit the report to National Anti-profiteering Authority (NAA) which gives its ruling based on report and hearings. The NAA would hear the company and also the complainant before passing a final order. The quantum of profiteering might go up or down depending on the case presented before the authority.

Nestle’s response

A Nestlé India spokesperson said that the company as a “responsible corporate citizen” has passed on the benefits of GST to consumers. “We wish to reiterate that in situations where the benefit could not be passed on instantly by reduction in Maximum Retail Price or increase in grammage, the amount was set aside to be subsequently passed on and was not reckoned either in sales or in profit,” he said.

He further added that it was on the company’s request that the authority advised Nestle to provisionally deposit the amount computed by the company, suo moto, in the Consumer Welfare Fund, which has been done. Nestle India has so far deposited ₹ 16.58 crore in the Consumer Welfare Fund.

The company also said it was hopeful that the procedure followed to pass on the GST benefit will be appreciated by the National Anti-Profiteering Authority and its stand will be vindicated. “We along with many other industry members have been requesting for clear rules and regulations to be framed to avoid any confusion and ambiguity. This will support ease of doing business,” the spokesperson added.

Rules say, anti-profiteering provisions get applied if the benefit of reduction un rate of tax on any supply of goods or services or the benefit of input tax credit is not passed on to the recipient by way of commensurate reduction in prices. An application to invoke anti profiteering provisions can be made by an interested party or a Commissioner or any other person.

Since the introduction of GST on July 1, 2017, the GST Council has so far lowered rates on 384 commodities and 68 different categories of services. This has resulted in revenue loss of over ₹80,000 crore. Since, December total of 320 cases of anti profiteering referred to DG-AP, among which FMCG sector alone has 269 cases against them. Besides Nestle India, HUL is the other major FMCG company, which is facing profiteering charges. The DG-AP has found profiteering of nearly ₹ 500 crore against HUL.

Related Topics