Three P&G firms fined Rs 241 cr for not passing on GST benefits to consumers

According to the Director General of Anti-Profiteering, the companies failed to pass on the benefit by way of commensurate reduction in the prices of the products.
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A fine of over Rs 241.5 crore has been imposed by the National Anti-Profiteering Authority (NAA) on P&G Home Products, P&G Hygiene and Healthcare, and Gillette India Ltd for not passing on benefits of GST rate cut to the consumers. According to the Director General of Anti-Profiteering (DGAP), who had investigated the matter, the companies had not passed on the benefit of reduction in the rate of GST from 28% to 18% with effect from November 15, 2017 to the recipients by way of commensurate reduction in the prices of the products.

The DGAP also stated that the base prices of 1,383 goods had been increased by the three companies after the rate of tax on them was reduced, said the NAA order. The DGAP's investigation found that the respondents had profiteered an amount of Rs 241,51,14,485 by denying benefit of tax reduction to their customers.

As per the DGAP, the respondents had claimed in their reply to the notices issued by him that the net price for a product (post reduction of discount allowed by way of claims) charged to the various trade partners should be considered for the purpose of the investigation into the alleged profiteering by the respondents.

The Director General had also claimed that the respondents had increased the base prices of the impugned goods when the rate of GST had been reduced from 28% to 18% with effect from November 15, 2017. "It is established from the investigation that the respondents have not reduced their prices to their recipients and hence they are squarely responsible for not passing on the benefit of tax reduction," said the order copy.

The profiteered amount in respect of all the three companies has been determined as Rs 181.51 crore in respect of Procter & Gamble Home Products, Rs 2 crore in respect of Procter & Gamble Hygiene & Health Care, and Rs 57.99 crore in respect of Gillette India.

They have to deposit 50% of the profiteered amount in the Central Consumer Welfare Fund and the rest 50% in the Consumer Welfare Fund of the states and Union Territories.

A P&G spokesperson said that its companies have entirely passed on the net commensurate benefit under GST to the recipients. The spokesperson further said that they communicated the same through advertising in mass media to help increase awareness with the consumers, shoppers and retailers.

"Also, along with the industry, we have been consistently requesting the authorities for a clear set of rules and regulations to eliminate ambiguity and complexity in this area."

P&G will review the order by NAA, and assess all possible legal options, said the spokesperson, adding: "We are hopeful that our stand will be vindicated."

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