GST: Anti-profiteering body notice to HUL for withholding pricing benefits

This is the sixth notice issued by DGS to entities for not reducing prices after GST rollout

The Directorate General of Safeguards has slapped notice for profiteering on FMCG firm HUL for allegedly not passing on price reduction benefit to consumers after GST rollout.

This is the sixth notice issued by DGS, the investigative arm of the finance ministry, to entities for not reducing prices post Goods and Services Tax implementation from July 1.

"The standing committee had referred the matter to DGS which in turn has issued queries to HUL seeking a response on whether the benefit of tax rate reduction after GST is passed on to consumers," a source said.

In an email response to queries sent by PTI, HUL said it has received the notice from DGS on January 16.

"We are in the process of ascertaining the full details. We will respond to the same stating our position," it said.

"HUL remains fully committed to ensuring that all benefits arising from the reduction in GST rates are fully passed on to the consumers. We have communicated to trade asking them to pass on the benefits to consumers," the company said.

As part of its investigation, the DGS usually calls for a company's balance sheet, profit and loss account, GST returns and details of invoice wise outward taxable supplies.

It also scrutinises the price list prior to and after GST rollout.

The company is given over a fortnight time to respond to the notice.

After studying the documents, the DGS gives its report to the Anti-Profiteering Authority for further action, which may include fine and extreme penalty like the cancellation of registration.

As per the structure of the anti-profiteering mechanism in the GST regime, complaints of local nature will be first sent to the state-level 'screening committee', while those of national level will be marked for the 'standing committee'.

If the complaints have merit, the respective committees would refer the cases for further investigation to the DGS.

DGS is mandated to complete its investigation within three months and may seek an extension of a further three months from the standing committee.

"We have accelerated our networks covering more than 800 SKUs (stock keeping units) to reduce prices and increase grammage in case of price point packs and most of these have already landed in the market," HUL said, adding that it has also been communicating the price reductions or increased grammages through advertisements in more than 10 languages.