Anti-profiteering provisions attracted for adopting incorrect methodology to pass on benefit of rate reduction: NAA
[Director General of Anti-profiteering v.Nestle India Ltd. [2019] 112 taxmann.com 202 (NAA)]
The respondent is a subsidiary of Nestle group and is engaged in manufacturing and sale of various food products including coffee, noodles, chocolates, etc. GST rates on several products supplied by the respondent were reduced from 28% to 18% w.e.f 15.11.2017 and from 18% to 12% w.e.f from
25.01..2018. Before any notice of investigation of profiteering was issued, the applicant suo motodeposited the profiteered amount of around Rs. 16 crore in the Consumer Welfare Fund. National Anti-profiteering Authority ordered investigation by Director General of Anti-profiteering (DGAP) against the respondent.
As per the DGAP's report, the respondent has resorted to profiteering by increasing base prices of around 300 stock keeping units (SKU) which were impacted by the rate reduction. The respondent passed on the benefit at the aggregate level of the SKU or at the product level whereas it was required to pass such benefit on every SKU so that the benefit could reach every buyer of that SKU. Hence, the methodology adopted by the respondent to pass on the benefit of rate reduction was incorrect. Therefore, the total profit made by the respondent was determined at around Rs. 89 crores. The NAA directed the respondent to reduce the prices proportionately and to deposit the balance profit in the Consumer Welfare Fund.
[Director General of Anti-profiteering v.Nestle India Ltd. [2019] 112 taxmann.com 202 (NAA)]
The respondent is a subsidiary of Nestle group and is engaged in manufacturing and sale of various food products including coffee, noodles, chocolates, etc. GST rates on several products supplied by the respondent were reduced from 28% to 18% w.e.f 15.11.2017 and from 18% to 12% w.e.f from
25.01..2018. Before any notice of investigation of profiteering was issued, the applicant suo motodeposited the profiteered amount of around Rs. 16 crore in the Consumer Welfare Fund. National Anti-profiteering Authority ordered investigation by Director General of Anti-profiteering (DGAP) against the respondent.
As per the DGAP's report, the respondent has resorted to profiteering by increasing base prices of around 300 stock keeping units (SKU) which were impacted by the rate reduction. The respondent passed on the benefit at the aggregate level of the SKU or at the product level whereas it was required to pass such benefit on every SKU so that the benefit could reach every buyer of that SKU. Hence, the methodology adopted by the respondent to pass on the benefit of rate reduction was incorrect. Therefore, the total profit made by the respondent was determined at around Rs. 89 crores. The NAA directed the respondent to reduce the prices proportionately and to deposit the balance profit in the Consumer Welfare Fund.
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