In a fresh move against fast moving consumer goods (FMCG) major, Hindustan Unilever (HUL), the Directorate General of Anti-Profiteering (DG-AP) has alleged that the company has profiteered Rs 495 crore by not passing on the benefits of reduced Goods and Services Tax India (GST) rates.

DG-AP, the government watchdog body, which was investigating the charges of profiteering against HUL since January this year, submitted its final report to National Anti-profiteering Authority (NAA) asserting profiteering charges, a senior government official told CNBCTV18.

The watchdog body has further alleged that HUL has profiteered on over 1,600 stock keeping units, including product categories such as shampoo, soaps, detergents etc., official added.

HUL was facing investigations for not passing on GST rate cut benefits announced in November 2017.

The company had already offered to pay Rs 160 crore to the government to compensate for the gains it made by not passing on the rate cut benefits to consumers in January 2018.

On January 16, DG-AP had first served profiteering notice to HUL for allegedly not passing on GST tax rate reduction benefit to consumers.

The DG-AP had sought details from HUL about the prices of its entire range of products pre and post GST rate cut in November last year.

As a part of investigation, DG-AP usually looks into company’s balance sheet, profit and loss account, GST returns and details of invoice wise outward taxable supplies.

Meanwhile, NAA officials told CNBC-TV18 that the authority has already concluded first round of hearing with HUL, where HUL contested the claim of Rs 495 crore made by DG- Anti profiteering.

After examining the documents, DG-AP gives its report to the National anti-profiteering authority for further action, which may include fine and extreme penalty like cancellation of registration.

“HUL has told NAA that the claims of Rs 495 crore by DG-AP is overstated. Rather, HUL had already deposited Rs 160 crore suo-moto to DG-AP,” NAA official told CNBC-TV18.

The final order by NAA authority is still awaited and what needs to be seen is whether the order is in favour of HUL or it confirms the claims asserted by DG-AP.

When CNBC-TV18 contacted HUL, the company spokesperson said that during the transitionary period, HUL suo-moto offered to pay the government the benefits which accrued to the company but could not be passed to the consumers.

Here's the company's full response:

“At Hindustan Unilever Limited (HUL), we have always maintained that GST is a progressive reform which will benefit consumers and the industry at large. HUL has passed on the entire benefit received under GST to its consumers either through reduction in prices or through increase in grammage.

During the transitionary period, HUL suo moto offered to pay the government the benefits which accrued to the Company but could not be passed to the consumers. This amount aggregating to Rs. 160 crores (including Rs. 36 crore on behalf of our redistribution stockists), has since been deposited with the Consumer Welfare Fund of the Government. During the entire process, we have kept the Government informed of the approach and the manner that we had adopted in passing on the GST benefits to consumers.

The Director General Anti-Profiteering has submitted a report which we have responded to in a comprehensive manner. We are confident that the National Anti-Profiteering Authority (NAA), will consider our inputs and the practices followed in the FMCG industry, and take a just view of the matter.”

First Published:Sept 6, 2018 2:00 PM IST