Hindustan Unilever Held Guilty of GST Profiteering By National Anti-Profiteering Authority :

The National Anti-Profiteering Authority (NAA) has held Hindustan Unilever Limited (HUL) guilty of profiteering by failing to pass on the benefit of GST rate reductions to consumers. The Authority found that HUL increased the base prices of products despite GST rates being reduced from 28% to 18% and from 18% to 12% with effect from November 15, 2017.

The proceedings arose from complaints alleging that HUL had not passed on the benefit of GST rate reductions introduced with effect from November 15, 2017. The applicants alleged that although GST on several products was reduced, HUL retained the existing MRPs by increasing the base prices of its products.

The matter was referred by the Standing Committee on Anti-Profiteering to the Director General of Anti-Profiteering (DGAP) for investigation. The DGAP examined HUL's sales and pricing data for the period from November 15, 2017 to February 28, 2018 and concluded that the company had resorted to profiteering.

The NAA noted that HUL had increased the base prices of products after the GST rate reductions, thereby keeping the selling prices at the pre-reduction level or failing to reduce them accordingly. The Authority determined the profiteering due to denial of the GST benefit at Rs 455.92 crore, apart from Rs 78.97 crore of TRAN-2 credit, taking the total amount of profiteering to Rs 534.89 crore. Consequently, the Authority confirmed Rs 383.35 crore as the amount of benefit denied to customers.

Accordingly, the Authority held that HUL had committed an offence under Section 122(1)(i) of the CGST Act, 2017 by issuing incorrect invoices to customers. Since HUL had been found guilty of profiteering and violation of Section 122(1)(i), the Authority directed that a fresh notice be issued to the company to explain why penalty should not be imposed.

Applying Rule 133(3)(c) of the CGST Rules, 2017, the NAA directed HUL to deposit 50% of Rs 383.35 crore, i.e. Rs 191.68 crore, in the Central Consumer Welfare Fund and the remaining amount in the Consumer Welfare Funds of the concerned States.