HUL, P&G pay GST liability under cross charge mechanism following enquiry by GST authorities

FMCG majors Hindustan Unilever Ltd., and Procter & Gamble have begun part payment of GST dues under the cross charge mechanism, people with knowledge of the matter told CNBC-TV18.

Sources say that the Director General of GST Intelligence had issued notices to both these companies over unpaid taxes 15 days ago.

Cross Charge Mechanism allows tax on goods or services supplied without consideration between entities with different GST Registration numbers.

The DGGI may further enquire into unpaid GST dues under the cross charge mechanism by other FMCG companies, the source said.

In response, Hindustan Unilever told CNBC-TV18 that they have fully and transparently provided data to GST authorities last week with regards to an enquiry. The company further said that the GST Authorities have not made any allegation of tax avoidance.

"In an enquiry by GST authorities last week, we were asked to provide some information and data, which was fully and transparently provided. No allegation of tax avoidance on any issue whatsoever was made. The payment of GST made at the end of the enquiry was routine in nature and would have been made before the due date by the company," HUL's response stated.

A P&G spokesperson also said that the company is fully committed to compliance with local laws and regulations.

"As a responsible organization, P&G is fully committed to compliance with local laws and regulations, and we take this responsibility very seriously. In case of any queries, we cooperate with concerned authorities and transparently engage with them, as was followed with the GST authorities recently. No tax evasion has been alleged against us. In fact, we have determined and deposited additional taxes in good faith," the spokesperson said.