The National anti-profiteering authority (NAA), goods and services tax (GST) profiteering watchdog has imposed a fine of Rs. 90 crore on Swiss multinational food and drink processing conglomerate Nestle. The fine has been imposed for not passing on the benefit of rate reduction to the consumers.
The anti-profiteering authority said that Nestle adopted an illegal, arbitrary and illegal approach to pass on the benefit of GST rate reduction and the same resulted in inequality while passing on the benefit of tax reduction.
The NAA clarified that the benefit of rate reduction was supposed to be passed on for each stock keeping unit (SKU) and not at the product level. The agency observed that the benefit was either not passed on for some SKUs, while some SKUs within a category were given more than the required benefit.
‘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’ noted the watchdog agency.
The NAA order said that Nestle needs to deposit a total of Rs. 73 crores within the next three months from the date of passing this order. Nestle, known for the brand like KitKat, Munch, and Nescafe, had already deposited Rs 16 crore in the consumer welfare fund last year on a voluntary basis and now requires depositing Rs 73 crore within the next three months.
Commenting on fine imposed by GST watchdog agency, Nestle India spokesperson said, ‘Nestle India as a responsible corporate citizen has passed on the benefits of GST to consumers and will consider appropriate actions after studying the order by the NAA’.