After McDonald’s franchisees, Honda Car dealer, it is FMCG Hindustan Unilever Limited (HUL) that is facing the ire of the government for allegedly not passing on price reduction benefit to consumers post-GST rollout. According to PTI, the Directorate General of Safeguards (DGS) has slapped notice for profiteering on HUL, seeking details from the company about the pre and post GST prices of its entire products range.
The DGS last month served notices to the franchisee of McDonald’s family restaurant — Hardcastle Restaurant for the price of its “McCafe Regular Latte”, and two other entities, including retail shopping outlet Lifestyle International, for allegedly not passing the benefit of cost reduction to consumers. This is the sixth notices served by the DGS under the Anti-Profiteering rule.
In November last year, the government formed National Anti-profiteering Authority under the GST after it found out that benefits were not being passed on to customers. According to the anti-profiteering rules, the authority will suggest the return of the undue profit earned from not passing on the reduction in tax to consumers along with an 18 percent interest and also impose a penalty.
After the 23rd GST Council meeting, the body announced rate cuts on as many as 178 items and sternly asked companies to pass the benefit to customers. The GST Council also reduced rates on all restaurants to 5%, and withdrew Input Tax Credit (ITC) benefit after it was found that the restaurants were not passing this benefit to customers as well.
As part of its investigation, the DGS usually looks into for company’s balance sheet, profit and loss account, GST
returns and details of invoice wise outward taxable supplies. It also scrutinises the price list prior to and post-GST
“We have accelerated our networks covering more than 800 SKUs (stock keeping units) to reduce prices and increase grammage in case of price point packs and most of these have already landed in the market,” HUL told PTI.
As per the structure of the anti-profiteering mechanism in the GST regime, complaints of local nature will be first sent to the state-level ‘screening committee’, while those of national level will be marked for the ‘standing committee’. If the complaints have merit, the respective committees will refer the cases for further investigation to the DGS. The DGS is mandated to complete its investigation within 3 months and may seek an extension of a further 3 months from the standing committee.