Delhi High Court stays NAA order asking Reckitt to deposit Rs 63 lakh

The Delhi High Court Monday stayed the National Anti-profiteering Authority (NAA) order directing pharma major Reckitt Benckiser to deposit in the consumer welfare fund over Rs 63 lakh it allegedly profiteered from the sale of Dettol handwash between 2017 to 2019.

Justice Rajiv Sahai Endlaw made it clear the stay would come into operation only if the pharma major deposits the amount with NAA within two weeks.

The March 19, 2020 order of the NAA, apart from directing deposit of the amount, had also asked Reckitt Benckiser to show cause why penalty be not imposed upon it in accordance with the provisions of the Central Goods and Services Tax (CGST) Act.

The court said the NAA may commence proceedings pursuant to the show cause notice issued by it, but any final order imposing penalty on the pharma major would not be given effect to till further orders in the petition.

The court also issued notice to the Ministry of Finance, NAA and the Director General of Anti-Profiteering (DGAP), represented by central government standing counsel Ravi Prakash and advocate Farman Ali Magray, seeking their stand on the plea by August 24.

The DGAP, in its investigation, had found that Reckitt Benckiser had between November 2017 and March 2019 profiteered by Rs 63,14,901 by not passing on to consumers the benefit of GST reduction (on Dettol hand wash) by reducing its prices accordingly.

The GST reduction had come into effect from November 15, 2017.

Reckitt Benckiser, in its plea, has contended that it had passed on benefit of GST reduction by way of "grammage increase".

However, the NAA said the benefit has to be passed on to consumers in monetary terms, the petition has said.

It has also contended that the investigation was ordered after the time limit -- of two months from receipt of a complaint -- for such an action had expired.

It has claimed that the complaint was filed in July 2018 and the order for investigation was issued in March 2019, much beyond the two month statutory limit.

According to the petition, the NAA has claimed the initial complaint of July 2018 was returned and thereafter, in February 2019 another complaint was made and on that an investigation was ordered.

Reckitt has contended that it was not provided with the second complaint nor was it referred to in any of the notices issued to it so far or in the proceedings held before NAA.