Hindustan Unilever has received a notice from the Directorate General of Safeguards (DGS), which has been checking to make sure companies are passing on the benefits of lower levies under the goods and services tax (GST) regime to consumers.
DGS, the investigation arm of the revenue department, has sent notices under GST anti-profiteering rules to Hardcastle Restaurants, which runs McDonald’s restaurants in west and south India, Lifestyle International, Honda Motor and an HULBSE -0.33 % dealer in Jaipur in the past few weeks.
HUL said it has got the notice and is in the process of ascertaining all details. “We will respond to the same stating our position,” said a spokesperson, adding that it has instructed trade channels to pass on benefits to consumers.
Price-reduction efforts gained pace in November when the GST Council dropped tax rates on 200 products including chocolates, toothpaste, shampoo, washing powder and shaving creams, to 18% from 28% to ease the burden on consumers. The government wants to ensure that this intent is translated into action.
From releasing ads informing consumers about revised prices to deploying software to closely monitor billing and invoicing at retail stores, most companies are ensuring that products reflect the reduced GST rates on shop shelves. “We have accelerated our networks covering more than 800 SKUs (stock keeping units) to reduce prices and increase grammage in case of price-point packs and most of these have already landed in the market,” HUL said.
“List of key SKUs with lower prices and increased grammages is available on our website. In addition, HUL has also been communicating the price reductions or increased grammages through advertisements in more than 10 languages.” Since November, companies have been allowed to “affix an additional sticker or stamping or online printing for declaring the reduced MRP (maximum retail price) on the pre-packaged commodity” in view of the revision in GST rates.
The additional sticker has to be pasted alongside the earlier labelling — to show the difference in price — and was allowed until December last year. That was to allow for a transition period of about 2-4 weeks before packs with new price labels reached stores. The government has also established the National Anti-Profiteering Authority (NAA) to ensure that all benefits under the new tax regime are passed on to consumers. In the case of any prime facie evidence of suppliers not passing on benefits, the NAA will refer the matter to DGS for a detailed investigation.
“The Director General of Safeguards, upon completion of the investigation, within a period of three months or extended period of total six months, shall furnish a report to the NAA, who shall then pass the suitable order against the person indulging in profiteering. Such order may include directing the reduction in prices, refund of benefit availed to consumers etc.,” according to the DGS website.