The National Anti-Profiteering Authority (NAA) has ordered Patanjali Ayurveda Ltd to pay up Rs 75.08 crore for not passing on benefits of goods and services tax (GST) rate reduction on to consumers, adding that the company instead increased prices of its washing powder. The authority has directed the company to deposit the amount, along with 18% GST, to consumer welfare funds of Centre and the states within three months, according to an order passed on March 12.
“The respondent (Patanjali) has denied the benefit of tax reduction to consumers in contravention of the Central GST Act… therefore a showcause notice be issued directing it to explain why the penalty should not be imposed,” the authority added. The authority ruled that benefits of rate change from 28% to 18% and from 18% to 12% in November 2017, were not given to consumers. To the company’s arguments that it bore the cost of rate increase when compared to from pre-GST regime, and did not pass it on to consumers, were not accepted by the authority on the grounds that the company took a business call to not raise prices, and that cannot be a reason for denying tax reduction benefits to consumers.
The authority also set aside arguments that the investigation was violative of its Constitutional right to do business in the country. “The contention is not correct since the authority or DGAP has not acted as a price controller or regulator,” the authority noted, adding that, “The authority has only been mandated to ensure that benefits of tax reduction and ITC are passed on to end consumers who bear the burden of tax… who are voiceless, unorganised and vulnerable.” The Director General Anti-Profiteering (DGAP) has been ordered to submit a compliance report within four months.