The National Anti-profiteering Authority (NAA) has found that M/s Procter & Gamble (P&G) and Gillette India (Respondents) allegedly profiteered over Rs. 243 crores by not passing the GST reduction benefits to customers for period 14.11.2017 to 30.09.2018. Further investigation has been ordered for profiteering for period 01.10.2018 onwards.
The Applicant viz Director General of Anti Profiteering (DGAP) alleged that the Respondents, M/s Procter & Gamble (P&G), and Gillette India had not passed on the benefit of reduction in the rate of GST from 28% to 18% w.e.f. 15.11.2017 to the recipients by way of commensurate reduction in the prices of the products being sold by them in terms of Section 171 of the CGST Act, 2017.
The applicant viz DGAP had also stated that the base prices of 1383 goods had been increased by the Respondents after the rate of tax was reduced on P&G and Gillette India them and hence, the Respondents had contravened the provisions of Section 171(1) of the CGST Act, 2017. The DGAP had further reported that the Respondents had profiteered an amount of Rs. 2,43,93,90,580 by denying the benefit of tax reduction to their customers.
The NAA headed by Chairman B.N.Sharma stated that the confirmed amount of tax benefit that the Respondent companies P&G Home Products, P&G Hygiene and Health Care, and Gillette India have not passed on to consumers was Rs.181.51 crore, Rs.2 crore and Rs.57.99 crore, respectively for the period 14.11.2017 to 30.09.2018.
The NAA ordered the companies to reduce the price of the products commensurately in respect of which profiteering has been computed in terms of Rule 133(3)(a) of the CGST Rules and Section 171(1) of the CGST Act.
Further NAA also directed for deposit half of the profiteered amount to the central consumer welfare fund and rest to the states, along with an interest within three months from the date of passing of the order.
The NAA further held that it is revealed from the record that there are reasonable grounds to believe that the Respondents have apparently not passed on the benefit of tax rate reduction w.e.f. 01.10.2018 onwards. the DGAP has been directed to carry out further investigation to compute the profiteered amount till the date it has been passed on by the Respondents and furnish report as per provisions of Rule 129(6).
However, perusal of the provisions of Section 171 (3A) under which penalty has been prescribed for the above violation shows that it has been inserted in the CGST Act, 2017 w.e.f. 01.01.2020 vide Section 112 of the Finance Act, 2019 and it was not in operation during the period from 15.11.2017 to 30.09.2018 when the Respondents had committed the above violation and hence, the penalty prescribed under Section 171 (3A) cannot be imposed on the Respondents retrospectively. Accordingly, NAA held that notice for imposition of penalty is not required to be issued to the Respondents.
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Frah Saeed is a law graduate specializing in the core field of indirect taxes and is the Co-founder of taxwallah.com. She has authored many publications on GST and is into full-time consultancy on GST to big corporates. She as a part of taxwallah.com heads a team comprising of Chartered Accountants and Advocates and plays a key role in our mission to disseminate GST knowledge to all.
