National Anti Profiteering Authority (NAA) on Monday penalised Hindustan Unilever Ltd (HUL) around Rs 535 crore for not passing rate reduction benefits to consumers, said sources familiar with the matter.
The complaint before the NAA stated that although the Goods and Services Tax (GST) rate on a large number of products was cut from 28 percent to 18 percent, HUL had not reduced the maximum retail price (MRP) of its products.
The NAA while passing the order said that Rs 383.35 crore worth "benefit has been denied" by HUL to his customers. As per GST rules, 50 percent of the amount profiteered or Rs 191.68 crore is required to be deposited by the company in the central consumer welfare fund (CWF), while the balance amount is to be deposited in the CWF of concerned states where the company sold its products.
"Since the respondent (HUL) has already deposited an amount of Rs 160.23 crore in the Central CWF, he is hereby directed to deposit an amount of Rs 31.45 crore in the central CWF and the balance amount of Rs 191.68 crore in CWFs of the states," the NAA said.
Meanwhile, HUL said they are yet to receive the order from NAA order. "Once we receive the order, we will review all the possible options,” the company told CNBC-TV18.
"In the absence of set rules and guidelines on profiteering, we have gone by the spirit of the law, and we passed on the entire benefit received under GST to consumers – either through the reduction in prices or through increase in grammage," HUL said.
HUL has since suo moto deposited Rs 160 crores (including Rs 36 crore on behalf of our redistribution stockists) into the government’s consumer welfare fund, it said.
"During the entire process, we have kept the government informed of the approach and the manner that we had adopted in passing on the GST benefits to consumers," the company added.
Driven by volume growth and operational performance, HUL had reported a 19 percent increase in net profit to Rs 1,525 crore in the September quarter.
In September, in a first of its kind ruling, NAA had ruled that suppliers will be liable to pay penalty for not passing the benefits of GST rate reduction on sale of goods.
In November last year, the union cabinet had approved the establishment of NAA under the GST to ensure that benefit of the reduction in prices under the uniform tax regime reaches the consumers.
The present investigation was conducted by the Directorate General of Anti-Profiteering between November 15, 2017, and February 28, 2018.