Patanjali group was found guilty of profit-making by the National Anti-Profiting Authority (NAA) and ordered to deposit Rs 75 Crore in the Consumer Welfare Fund under the GST anti-profit-making provisions. The matter concerns Patanajali’s Group Detergent Powder 2 KG, for which CBIC reduced the GST rates from 28 per cent to 18 per cent w.e.f. 15.11.2017 empty Notification No. 41/2017-Central Tax (Rate) dated 14.11.2017.
The Authorities noted that, following the reduction of the GST prices empty above notice, Patanjali Group raised the Base Price of its detergent powder to produce more income instead of passing on the GST rate reduction value to its consumers. Anti-profit making laws shall be applied if the benefit of a tax cut on the procurement of products or services or the benefit of an import tax credit is not passed on to the consumer by means of a price discount. Patanjali Group claimed that concessions had been given by a cash-back program. However, the NAA maintained that the gain of a decrease in the tax rate would be passed on to customers by a ‘commensurate price cut.’ Cash-back programs are operated by FMCG companies to boost revenues and are not linked to tax cuts, NAA observed.
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Patanjali Group made a profit to the tune of Rs 75 crore and the anti-profiteering committee directed the firm to deposit the same amount, along with an 18 percent interest rate, to the consumer welfare funds of the Center and the States within three months. A show-cause notice was also sent to Patanjali, which asked Patanjali to clarify why the penalty recommended under the GST provisions could not be levied on the company.
Comments from the Rajput Jain & Associates :
Patanjali Group is not the only relinquished corporation that came under the jurisdiction of the anti-profit regulator. Samsung, Hindustan Uniliver, Samsonite & Nestle were also recently fined and ordered to pay the proceeds. It is really sad to see how these global companies are not even able to pass on the advantages of the GST rate cut to consumers and find opportunities to make more money by rising the base costs of their goods. But I have to admit that the NAA plays its position very well and recovers all the money received along with interest.
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