The Delhi High Court gave interim relief to Nestle India by ordering a stay over the payment outstanding penalty which the National Anti-Profiteering Authority (NAA) had addressed the local firm of the Swiss fast-moving consumer goods (FMCG) firm to clear. On February 10th, the court suggested that the company had already paid 16.58 crores out of the total demand of Rs 89.73 crores and clamped a stay over the remaining balance amount.
The Goods and Services Taxes (GST) profiteering watchdog imposed a penalty of rupees 90 crores on the FMCG giant as they were unable to pass on the benefit of rate reduction to consumers. It was noted by the organisation that they maintained a methodology to pass on GST rate-cut benefit as illogical, arbitrary and illegal, the action led to unfairness and inequality while passing on the benefit of tax reduction. In 2018, the manufacturer of Maggi, KitKat, Nescafe and Nestle had deposited around 16 crores in the Consumer Welfare Fund voluntarily. The order said, “The amount of Rs 73 crores shall be deposited within the next three months from the date of passing this order”. The NAA held that the benefit of rate reduction was to be passed on for each stock keeping unit (SKU) and not at the product level. It observed that the benefit was either not passed on for some SKUs, while more than the required benefit was passed on in some SKUs within a category. It noted that the ‘most simple and appropriate methodology required to be adopted was to calculate the new maximum retail price (MRP) for each SKU, according to the tax calculation and to charge it accordingly’.
- Benefits of the FMCG Company were largely passed on by way of reduction of MRP or by way of increase in grammage.
- The information on GST reduction benefits together with substantiations provided to NAA.
- The FMCG Giant provisionally deposit the amount computed around 16.5 crores in the Consumer Welfare Fund.
- The amount of 73 crores needs to be deposited by Nestle within Three months as ordered made by NAA.
- The High Court of Delhi ordered a stay over the outstanding payment on the penalty imposed by NAA.
Edited by J. Madonna Jephi
Approved & Published – Sakshi Raje
(i) GST Station, GST anti-profiteering watchdog NAA imposes Rs 90-crore fine on Nestle https://www.gststation.in/gst-anti-profiteering-watchdog-naa-imposes-rs-90-crore-fine-on-nestle/
(ii) The Economic Times, Nestle gets interim relief on NAA’s outstanding fine https://m.economictimes.com/industry/cons-products/fmcg/nestle-gets-interim-relief-on-naas-outstanding-fine/amp_articleshow/74234684.cms