Patanjali found guilty of profiteering of Rs.75 Crore

Baba Ramdev's Patanjali found guilty of profiteering by the National Anti-Profiteering Authority (NAA) and has been ordered to deposit Rs 75 Crore in the Consumer Welfare Fund under the GST anti-profiteering provisions. The matter relates to Patanajali 's Detergent Powder 2 KG, for which GST Rates were reduced by CBIC from 28% to 18% w.e.f. 15.11.2017 vide Notification No. 41/2017 - Central Tax (Rate) dated 14.11.2017.

The Authority observed that after reduction of GST Rates vide above notification, Patanjali has increased the Base Price of its detergent powder to earn more profits instead of passing the GST rate reduction benefit to its customers. Anti-profiteering provisions are applied if the benefit of a tax cut on any supply of goods or services, or the benefit of input tax credit, is not passed on to the recipient by way of a price cut. Patanjali argued that discounts were given through a cash-back scheme. However, the NAA insisted that the benefit of a tax rate cut should be passed on to consumers via a ‘commensurate reduction in the prices. Cash-back schemes are run by FMCG firms to promote sales, and are not related to tax cuts, NAA observed.

Patanjali made a profit to the tune of Rs 75 crore and the anti-profiteering committee has ordered the company to deposit the same along with 18% interest rate, to the consumer welfare funds of Centre and the states within three months. A show cause notice was also issued to Patanjali directing it to explain why the penalty prescribed under the GST Provisions should not be imposed on the company.

Author's Note:

Patanjali is not the only renonwed company which has come under the scanner of the anti-profiteering regulator. Recently Samsung, Hindustan Unilever, Samsonite & Nestle were also fined and ordered to pay the amount profiteered. This is very unfortunate to see as to how these big giants are not even willing to pass benefit of GST rate reduction to customers and finds ways to earn more profits by increasing base prices of their products. But I must say that, NAA is playing its role very well and recovering the entire profit earned along with interest.

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