Samsonite India fined Rs 25.74 cr, served show-cause for profiteering

Firm accused of not reducing prices of its products after GST Council brought down the tax rate from 28% to 18%

The National Anti-profiteering Authority (NAA) has imposed a fine of Rs 25.74 crore on Samsonite India, a company engaged in the business of manufacturing and selling travel bags,for allegedly not reducing prices of its products after the GST Council reduced the tax rates from 28 per cent to 18 per cent in December, 2017.

The company was also asked to pay 18 per cent interest rate for the period between the amount collected by it from customers and the amount of profiteering deposited. 

NAA asked Samsonite to pay half the amount --Rs 12.87 crore to the Central consumer welfare fund  and the other half to the consumer welfare funds of the 33 states and union territories. 

The authority also served a show cause notice on the company as to why should penalty not be imposed on it as it resorted to profiteering. 

When contacted, Samsonite India declined to comment. 

While the complaint was lodged against company for profiteering on specific product -- American Tourister Sky Tracer HL Blue 68 cm Hard Trolley -- the Director General of Anti-Profiteering expanded its probe into other products of the company as well. 

Harpreet Singh, partner at KPMG, said,"“With this ruling it is clear that the authorities consider the ambit of anti-profiteering proceedings wide enough to include even products which were not complained about initially.” 

The company had argued that the product was sold not by it but by Amazon India and under anti-profiteering laws the investigation could be done against supplier of goods. 

The Authority dismissed the arguments of the company, saying that the complaint was lodged against it and not Amazon India. Also, the complaint was lodged on the basis of the maximum retail price (MRP) which only Samsonite can fix and not Amazon, the authority said. 

"This is the first ruling which has indirectly acknowledged the challenge faced by intermediary supplier on account of inability to change the MRP on account of GST rate reduction,” Singh said.