The complainant (a retailer of Maggi Noodles) alleged that despite GST rate cut on November 15, 2017, the base price of the product was increased to bring the MRP at par with pre-tax rate change price.
Kunj Lub, however, said that the benefit which accrued in respect of Rs 5 MRP pack had been passed on by reducing the price of Rs 12 MRP (70gm) pack of Maggi.
It was further submitted that MRP of Rs 12 pack was reduced by Re 1 which was more than what was required post GST rate cut.
The NAA in its order said that Kunj Lub has no such liberty to arbitrarily decide in respect of which products he would pass on the benefit and in respect of which products he would not pass such benefit.
"As per the provisions of Section 171 of the Act the benefit has to be passed on to each recipient and the same can not be selectively granted or denied.
"It is also clear that the Maggi Noodle pack of 35 gms is distinct from a 70 gms pack and both the packs may be bought by the different recipients/customers and hence the benefit accruing to one customer can not be given or denied to another nor can the benefit given to one set of customers arbitrarily enhanced and set off against the another. No such adjustments are permissible under the Act," NAA said.
The quantum of profiteering was Rs 90,778, of which Rs 2,253 has to be refunded along with 18 per cent interest to the complainant.
"Since the other customers of the product are not identifiable, the respondent is hereby directed to deposit the balance amount of Rs 88,525 along with the interest at 18 per cent till the date of deposit in the respective Central or State Consumer Welfare Fund within a period of 3 months," NAA said.
PwC India Indirect Tax partner and Leader Pratik Jain said this is another ruling which mandates that any benefit arising as a result of reduction in GST rate has to be passed on at each stock keeping unit (SKU) level and the same can not be passed on at a product or entity level.
"The authority has interestingly rejected the plea of legal tender issue (fractional pricing) citing that it is for the customer to furnish the required legal tender and a supplier can not resort to profiteering on account of the same.
"The ruling of NAA that pricing has to be done for each SKU is likely to lead to issues for certain industry segments specifically FMCG, which deals with number of SKUs," Jain said.
(This story has not been edited by Business Standard staff and is auto-generated from a syndicated feed.)