The anti-profiteering watchdog under the goods and services tax (GST) has held an Uttar Pradesh-based dealer of Maggi noodles guilty of profiteering after it jacked up the base price to deny consumers the benefit of a GST cut to 12% from 18%.
The National Anti-profiteering Authority (NAA) ordered the dealer to deposit Rs 90,778 along with an interest of 18% per annum to the consumer welfare fund and refund Rs 2,253 to the complainant. The complainant, a Maggi retailer, had alleged that the dealer had profiteered by selling ‘Maggi noodles pack of 35 gram’. However, the retailer subsequently wanted to withdraw the plaint but the request was rejected on grounds that the investigation had already been undertaken by the authorities.
The GST rate reduction came into effect from November 15 last year after the GST Council had approved rationalising rates for a host of items. Presenting its case to the NAA, the dealer said the benefit accruing from sale of 35-gram pack had been passed on by reducing the price of other pack of 70-gram pack.
Further, the dealer argued that the larger pack with maximum retail price (MRP) of Rs 12-pack was reduced by Rs 1, which was more than the total benefit accruing from the smaller pack with MRP of Rs 5 and Rs 10 pack cumulatively. The dealer also submitted that such reduction was made in light of legal tender issues due to fractional pricing.
But NAA found no merit in the dealer’s argument, and said the seller had no liberty to arbitrarily select products for passing on benefit of tax rate cuts.
Pratik Jain, partner and leader, indirect tax, PwC India, said:”This is another ruling which mandates that any benefit arising as a result of reduction in GST rate has to be passed on at each stock keeping unit level and the same cannot be passed on at a product or entity level. This is similar to what was held in the order issued earlier in the case of Lifestyle International.”