After penalising Patanjali for not passing on tax cuts to customers, the National Anti-profiteering Authority (NAA) has begun investigating the consumer goods company’s distributors to check if they pocketed the difference, said people with knowledge of the matter. The NAA has issued notices to about 10 of Patanjali’s biggest distributors over the past month for not reducing prices in line with cuts in goods and services tax (GST), they said.
The government has made several reductions in GST since it was introduced on July 1, 2017, in order to lower the prices of goods of mass use. Patanjali has already been asked to pay Rs 150 crore by the NAA. Investigations in the matter are ongoing and it is learnt that the company may appeal against the decision. Patanjali’s spokesperson didn’t respond to queries. Hindustan Unilever, Procter & Gamble, Johnson & Johnson and Hardcastle Restaurants, a franchisee of fast food chain McDonald’s, have been penalised or investigated for similar reasons.
The authority is also examining whether prices on consumer goods and pharmaceuticals held by distributors and stockists on June 30, 2017, were reduced after GST kicked in the next day. The notices seek details of prices charged on products, particularly cosmetics. “The (distributor) was legally bound to pass on the benefit of reduction in the GST rate to customers which he has not as it is apparent from the invoices,” according to one of the notices that ET reviewed.