Anti profiteering of Rs. 383 Crore for HUL

anti profiteering authority slapped Rs. 383 Crore demand

In a blow to Hindustan uniliver Ltd. anti profiteering authority has asked them to pay Rs. 383 crores. This amount will be deposited to Investor protection fund. In an order for complaint filed against them , GST authority for anti profiteering found that HUL hasn’t passed on the benefit of reduced rate of GST. The company provided the reason for delay from their side. They pleaded that the stock was there with distributors and it was not possible to make changes in price that early. 

An anonymous application filed to anti profiteering authority of GST. The applicant requested that his identity shouldn’t be disclosed. The applicant told authority that company didn’t reduced the prices on many of their consumer products on which rates were reduced from 28% to 18%. Also the company increased its base price to keep the after tax price same.

HUL also provided their calculation for benefit passed on. The calculation table is below.

anti profiteering

Ruling by NAA in case of HUL: 

Authority observed that the HUL has misunderstood the word”commensurate reduction” as accounting for commensurate cost.Also the respondent informed that his units were entitled for 58% refund of rate of tax which was 28%. reduction in rate also decreased the rate of refund for applicant.

Three main issues were required to be answered:

• Whether the rates of GST were reduced in respect of the products supplied by the Respondent w.e.f. 15-11-2018.
• If the rates were reduced whether the benefit of such reduction in the rates of tax was passed on to the consumers in terms of section 171 of the GST Act 2017. and
• If not, what was the quantum of profiteering by the respondent.

In it’s 98 page long order the authority found them guilty. The copy of order can be accessed at http://www.naa.gov.in/docs/hul.pdf.