GST anti-profiteering penalty on Baba Ramdev’s firm ’Patanjali’ for not passing on benefits

Mangalore Today News Network

Mumbai, Mar 18, 2020: Baba Ramdev-founded Patanjali Ayurveda has been found guilty of profiteering by the National Anti-Profiteering Authority (NAA) and has been directed to cough up Rs 75.08 crore under the GST anti-profiteering provisions. While the GST rates were revised from 28% to 18% in 2017, the Haridwar-based FMCG company was found to be holding on to the benefits of goods and services tax (GST) rate reduction instead of passing them to the consumers. The NAA noted that Patanjali instead increased the base prices of its washing powder. "The respondent [Patanjali] did not reduce the selling price of the "popular detergent powder 2 kg"… the respondent had increased the base price of the goods," NAA said in a statement dated 12 March as to Yahoo.

 

Patanjali Ayurveda made a profit to the tune of Rs 75.08 crore and the anti-profiteering committee has asked the company to deposit the amount, along with 18% interest rate, to consumer welfare funds of Centre and the states within three months. Patanjali Ayurveda is not the only FMCG company which has come under the scanner of the anti-profiteering regulator. Recently, Dove soap maker HUL and Maggi noodles fame Nestle were also asked to pay up as fine for profiteering.

However, Patanjali said that after the introduction of GST, it had to bear losses "as rates were increased and it did not increase prices," the NAA said in the statement. The argument was denied by the NAA. NAA said that Patanjali took a business call to not raise prices, and this cannot be a reason for denying tax reduction benefits to consumers. NAA also declined the FMCG maker’s argument that the investigation was in violation of Article 19(1)(g). "The contention is not correct since the authority or DGAP has not acted as a price controller or regulator," the regulator said. Meanwhile, the Director General Anti-Profiteering (DGAP) has been ordered to submit a compliance report within four months.