Tax authorities set Eyes on Raymond’s consumer care business

The Directorate General of GST Intelligence (DGGI) is probing the sale of Raymond’s consumer goods business to a Godrej unit.

In the month of April 2023, Godrej Consumer Products (GCPL) obtained Raymond’s FMCG business, including the KamaSutra, KS, Park Avenue, and Premium trademarks, through a lump sum payment.

GCPL announced that it has paid Rs. 2,825 crore for this acquisition.

According to the report, GST officials have asked questions about whether Goods and Services Tax (GST) should be applied to the transaction amount, and have requested to provide an explanation from Raymond Consumer Care (RCCL). They have pursued GCPL regarding this transaction to give an explanation.

This investigation took the DGGI’s Mumbai unit to the premises associated with Raymond for inspection.

This search is based on Section 67 of the Central GST (CGST) Act, which empowers officials to conduct an investigation if they suspect that essential information has been concealed to evade tax.

According to tax authorities, the Raymond-Godrej deal should be subject to 18 % GST. Right now, they are revising the documents provided and the clarification given by the involved parties.

A source said that the Directorate General of GST Intelligence (DGGI) inspection was about to specify the transaction and it was not a search.

The company added its statement that they have provided a relevant explanation along with documentary proof to support the claim that the sale of the business to GCPL, on a going concern basis, does not attract Goods and Services Tax (GST).

A tax expert’s opinion confirms that it was a slump sale of the business on a going concern basis, thus no GST applies.

In the Financial Year 2022, Raymond Consumer Care (RCCL) reported sales of Rs. 522 crore.

The company is very famous in the men’s deodorants category, ranking among the top five. Apart from this, it is the third-largest player in the branded condom segment. Though, it holds a smaller market share in the mainstream soaps and shampoo segment.