The anti-profiteering authority has ruled that India’s largest consumer goods company profiteered to the extent of Rs 535 crore against the company’s claim of Rs 160 crore.
In the absence of set rules and guidelines on profiteering, we have gone by the spirit of the law, and we passed on the entire benefit received under GST to consumers—either through reduction in prices or through increase in grammage.Hindustan Unilever Ltd.
In the absence of a framework or methodology to determine the way GST rate reductions or increase in input tax credits should be passed on across the value chain, any decision that doesn’t consider the overall cost, weight, size, package aspects may be challenged provided the intention of the law is satisfied, said MS Mani, partner at Deloitte India.
The break up for the profiteered sum, according to the National Anti-Profiteering Authority:
Rs 419.67 crore + Rs 36.19 crore + Rs 6.47 lakh = Rs 455.92 crore.
After inclusion of availed transition credit of Rs 78.97 crore = Rs 535 crore.
From Rs 455.92 crore:
- HUL has been allowed to deduct Rs 68.77 crore for providing extra grams to customers.
- The company has been allowed to deduct Rs 3.80 crore for supplies made to Central Police Force and Central Railway Police Force, for which GST wasn’t charged.
- From the remaining Rs 383.35 crore, half of the amount would have to be transferred to Consumer Welfare Fund, and half would be deposited in Consumer Welfare Fund of respective states where the business was carried out.
- Since HUL has already transferred Rs 160 crore to the welfare fund, it must transfer an additional Rs 31.45 crore to the Centre’s consumer welfare fund.
“The order has allowed adjustment where the benefit of GST was passed through increased grammage, which is positive for the industry,” said Abhishek Jain, an indirect tax partner at EY India.
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