P&G India charged with Rs 250-crore of GST profiteering

The Economic Times
April 24, 2019


The Directorate General of Anti-profiteering has charged Procter & Gamble India with profiteering from cut in goods and services tax to the extent of about Rs 250 crore by not passing on the benefits to consumers. 

“The investigation covered the entire range of products sold by the company and found anti-profiteering of about Rs 250 crore,” a DGAP official said. 

DGAP has submitted its report on the matter to National Anti-profiteering Authority, which will now hear the case and pass an order, the official said. The maker of Tide detergent and Pantene shampoo could face a penalty if the authority confirms the DGAP report. If found guilty, NAA can also direct P&G to reduce prices, and refund benefit availed to consumers.

The Indian unit of the world's biggest consumer goods firm controls more than half the market for sanitary napkins, diapers and shaving razors, a quarter in shampoo segment and about a fifth of India's laundry category.

A P&G spokesperson said it has always been committed to passing the net benefit of GST rate reduction to the consumers. 

“We have passed the net benefit and communicated the same via advertising in mass media to help increase awareness with the consumers, shoppers and retailers,” the spokesperson said. 

“We will continue to cooperate with the authorities in this matter and provide clarifications. We hope that the concerned authorities will appreciate the procedure followed to pass on the GST benefit and will take a just view of the matter.” 

In January, NAA had held the country’s top consumer products firm Hindustan Unilever (HUL) guilty of profiteering Rs 462 crore by not passing on GST benefits to consumers, which the company challenged in court. 

The Delhi High Court has stayed the demand until the final determination of the matter in the court. NAA has also held Jubilant Food-Works and Patanjali guilty for not passing on GST-cut benefit of Rs 41 crore and Rs 150 crore each. 

Last year, a DGAP probe had found that Nestle India had profiteered about Rs 100 crore by not passing on GST benefit. Since the rollout of GST in July 2017, most companies, including HUL and P&G, have said they have passed on the benefit of lower taxes by lowering prices or increasing the weight of items, something that NAA has not favoured yet.

Price reduction efforts gained pace in November 2017 when the GST Council cut 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 wanted to ensure that this intent is translated into action. 

Since November, companies were 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 had to be pasted alongside the earlier labelling — to show the difference in price — and was allowed until December. That was to allow for a transition period of about two-four weeks before packs with new price labels reach stores.

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