The goods and services tax (GST) profiteering watchdog the National Anti-profiteering Authority (NAA) has imposed a penalty of Rs 230 crore on global healthcare major Johnson and Johnson (J&J) for not providing the benefits of rate cuts to consumers. The authority has directed J&J to deposit the amount within three months.
The NAA observed that the methodology adopted by J&J to pass on GST rate-cut benefit was 'unreasonable, arbitrary, and incorrect, and hence cannot be accepted'. It was alleged that J&J had not passed on the benefits of cut in the rates on the products being supplied by it, when the rate of GST was reduced from 28 per cent to 18 per cent with effective from November 15, 2017.
"The respondent (J&J) denied the benefit of tax reduction to customers in contravention of Section 17(1) of CGST Act, 2017 and has thus profiteered as per the explanation attached to Section 171 of the Act," the authority said in the order.
As per the anti-profiteering rules under GST, "benefits of input tax credit should have been passed on to the recipient by way of commensurate reduction in prices."
Earlier this month, NAA had slapped a fine of Rs 90 crore on fast-moving consumer goods (FMCG) major Nestle for profiteering from cut in GST rates.
Edited by Chitranjan Kumar