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Patanjali fined for not passing GST benefits to customers, increasing rates

Patanjali has to deposit the fine amount, along with 18% GST to consumer welfare funds of the central government as well as funds of state governments, according to an order passed by the NAA

twitter-logoBusinessToday.In | March 17, 2020 | Updated 09:52 IST
Patanjali fined for not passing GST benefits to customers, increasing rates
Patanjali Ayurveda Ltd

Patanjali Ayurveda Ltd has been fined Rs 75.08 crore by the National Anti-Profiteering Authority (NAA) for not passing the benefits of goods and services tax (GST) rate reduction on to the consumers. According to reports, the NAA has said that Patanjali had increased the price of their washing powder after GST reduction.

Patanjali has to deposit the fine amount, along with 18% GST to consumer welfare funds of the central government as well as funds of state governments, according to an order passed by the NAA, as mentioned in a report in The Economic Times.

"The respondent (Patanjali) has denied the benefit of tax reduction to consumers in contravention of the Central GST Act,therefore a showcase notice be issued directing it to explain why the penalty should be imposed," NAA told the daily. The NAA has said that the benefits of rate change from 28 per cent to 18 per cent and from 18 per cent to 12 per cent that it implemented in November 2017 have not been passed on to the consumers.

According to the daily, Patanjali has argued that they bore the cost of rate increase when compared to the pre-GST regime and did not pass the cost of increased prices onto the consumers. The NAA did not accept this on the grounds that Patanjali took a business call to not increase prices and that this cannot be a reason for not giving GST reduction benefits to the consumers. NAA rejected another argument of Patanjali which was that the investigation by the NAA was a violation of Patanjali's right to do business in the country.

"The contention is not correct since the authority or DGAP has not acted as a price controller or regulator," the NAA said, adding that, "The authority has only been mandated to ensure that benefits of tax reduction and ITC are passed on to end consumers who bear the burden".

The Director-General Anti-Profiteering (DGAP) has been directed to submit a compliance report on Patanjali within the next four months.

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