India's largest consumer goods company Hindustan Unilever Ltd (HUL) said on Wednesday that it would consider "legal options" after the GST anti-profiteering authority found FMCG player guilty of not passing on rate cut benefits to consumers.
The National Anti Profiteering Authority (NAA) on Monday passed an order saying that Rs 383.35 crore worth "benefit has been denied" by HUL to his customers.
As per GST rules, 50 per cent of the amount profiteered or Rs 191.68 crore is required to be deposited by the company in the central consumer welfare fund (CWF), while the balance amount is to be deposited in the CWF of concerned states where the company sold its products, according to a PTI report.
Reacting to the news, shares of the large cap stock fell up to 2.33 per cent to 1,742 level in the early trade on the Bombay Stock Exchange today. However, the stock made smart recovery in the final hour of the trade to close at Rs 1,791.15 apiece, up 0.43 per cent.
The exchange had sought clarification from the company with respect to above development.
In a clarification to the exchange, HUL said, "The NAA order refers to the need to pass on the benefit of reduction in rates to consumers which is fully consistent with the company's stand and actions. However, it made a narrow interpretation of the law and did not take into account well established industry practice backed by law."
The company further said that no methodology has been determined by NAA as required under law to determine if benefit has been passed or not.
"Given there is divergence on some basic issues, HUL will, consider legal options available to it," it added.
HUL said that it has always maintained that the GST is a progressive reform which will benefit consumers and the industry at large. "In the absence of set rules and guidelines on profiteering, HUL has gone by the spirit of the law, and passed on the entire benefit received under GST to consumers - either through reduction in prices or through increase in grammage."
"HUL had taken many steps as a matter of good governance and by keeping consumers interest in mind. HUL kept the Government informed of the approach and the manner that it had adopted in passing on the GST benefits to consumers," it said in the exchange filing.
Edited by Chitranjan Kumar