Hindustan Unilever served GST profiteering notice

New Delhi: The Directorate General of Safeguards (DGS) has served a notice for profiteering on Hindustan Unilever Ltd (HUL) for allegedly not passing on price reduction benefit to consumers post GST rollout.

This is the sixth notice issued by DGS, the investigative arm of the finance ministry, to entities for not reducing prices post implementation of goods and services tax on 1 July.

“The standing committee had referred the matter to DGS which in turn has issued queries to HUL seeking response on whether the benefit of GST rate cut post GST is passed on to consumers,” said a person aware of the matter.

In an email response to queries sent by Press Trust of India, HUL said it has received the notice from DGS on 16 January. “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 towards ensuring that all benefits arising from 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.

“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.

As part of its investigation, 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 scrutinizes the price list prior to and post 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 cancellation of registration.

According to 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.livemint