NAA holds dealers guilty of profiteering

By: | Published: December 8, 2018 5:07 AM

A Delhi-based Johnson & Johnson products dealer and a Gurugram-based bakery selling Cadbury and Nestle products – guilty of profiteering for increasing the base price of their products after GST rate reduction so that the MRP remained the same.

Respondents argued that they had no control over fixing either the base price or the MRP as they were charged increased prices by these companies.

In two nearly identical cases, the anti-profiteering watchdog held two distributors – a Delhi-based Johnson & Johnson products dealer and a Gurugram-based bakery selling Cadbury and Nestle products – guilty of profiteering for increasing the base price of their products after GST rate reduction so that the MRP remained the same. This denied the benefit of lower prices to consumers.

The Johnson & Johnson dealer was asked to deposit profiteered amount of a little over Rs 5 lakh along with 18% interest in the consumer welfare fund. Similarly the bakery has also been ordered to deposit nearly Rs 15,000 in the fund. Additionally, the NAA asked its investigative arm – director general of anti-profiteering (DGAP) – to further investigate the bakery for the period after March 31 this year to ascertain if it continued to profiteer in the same manner.

In each case, the respondents argued that they had no control over fixing either the base price or the MRP as they were charged increased prices by these companies. One respondent also argued that MRPs were fixed by the companies through their software. However, the order said that these dealers were also registered under GST Act and were legally bound to follow through after the rates were reduced by GST Council.

Abhishek Jain, Tax Partner, EY said: “A critical aspect to be noted in this Ruling is that the responsibility of compliance with anti-profiteering provision is on the seller of the products and a retail dealer selling goods to the end customer cannot shift his accountability of this compliance to the original manufacturer of the goods.”

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