Mumbai: Hindustan Unilever (HUL), which has been ordered by the National Anti-Profiteering Authority (NAA) to deposit around Rs 223 crore in consumer welfare funds of the government for failing to pass on the entire benefit of GST reduction last year, is considering taking a legal course of action.
An HUL company spokesperson said, “The NAA order refers to the need to pass on the benefit of reduction in rates to consumers which is fully consistent with HUL’s stand and actions. However, it
makes a narrow interpretation of the law and does not take into account well-established industry practice backed by law. Also, no methodology has been determined by NAA as required under law to determine if the benefit has been passed or not. Given there is a divergence on some basic issues, HUL will consider legal options available to it.”
On December 24, NAA passed an order that HUL did not pass on the entire benefit to consumers when GST was reduced from 28% to 18% on home and personal care products in November 2017. NAA estimated the amount of profiteering by HUL at around Rs 535 crore, of which around Rs 455 crore was denial of benefit to consumers. After taking into account certain credits that were given to HUL, and an amount of Rs 160 crore the company on its own deposited with the consumer welfare funds of the government, the net undue gains, according to the order, stand at a little over Rs 223 crore.
A number of companies have been served anti-profiteering notices by NAA. However, these have been contested in courts of law. Recently, an order passed by NAA against real estate developer Pyramid Infrastructure was stayed by the Delhi high court. In another case, the Bombay high court stayed anti-profiteering investigations against Hardcastle Restaurants, the franchisee of McDonald’s.
An HUL company spokesperson said, “The NAA order refers to the need to pass on the benefit of reduction in rates to consumers which is fully consistent with HUL’s stand and actions. However, it
makes a narrow interpretation of the law and does not take into account well-established industry practice backed by law. Also, no methodology has been determined by NAA as required under law to determine if the benefit has been passed or not. Given there is a divergence on some basic issues, HUL will consider legal options available to it.”
On December 24, NAA passed an order that HUL did not pass on the entire benefit to consumers when GST was reduced from 28% to 18% on home and personal care products in November 2017. NAA estimated the amount of profiteering by HUL at around Rs 535 crore, of which around Rs 455 crore was denial of benefit to consumers. After taking into account certain credits that were given to HUL, and an amount of Rs 160 crore the company on its own deposited with the consumer welfare funds of the government, the net undue gains, according to the order, stand at a little over Rs 223 crore.
A number of companies have been served anti-profiteering notices by NAA. However, these have been contested in courts of law. Recently, an order passed by NAA against real estate developer Pyramid Infrastructure was stayed by the Delhi high court. In another case, the Bombay high court stayed anti-profiteering investigations against Hardcastle Restaurants, the franchisee of McDonald’s.
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