Samsung fined Rs 37 lakh for not passing GST benefits to consumers

India’s profiteering watchdog has ordered Samsung to pay Rs 3.7 mn for not passing goods and services tax (GST) rate cut benefits on television sets to consumers.
 
The National Anti-Profiteering Authority (NAA) held that the South Korean company did not reduce the selling price of its 32-inch LED TV 32FH4003. This was despite a cut in GST rates to 18 per cent from 28 per cent on television sets.
 
Besides, the company was also held for not passing on the rate cut benefit on power banks amounting to Rs 29,736, taking the total profiteered amount to Rs 37.85 lakh.

 

The GST Council had reduced rates on television sets above 26 inches and up to 32 inches screen size. Also, GST on power banks was reduced to 18 per cent from 28 per cent from January 1, 2019.
 
“The prices of products affected by the rate reduction were not decreased commensurately. Hence, it was a violation of Section 171(1) of the CGST Act 2017,” the NAA said in its order.
 
The order said that if there was any increase in costs, the company should have increased prices before December 31, 2018.
 
“However, it cannot be accepted that costs had increased on the intervening night of December 31, 2018, and January 1, 2019, when the rate reduction had happened. This had forced the company to increase prices exactly equal to the reduction of tax rate. Such an uncanny coincidence is unheard of and hence there is no doubt that the respondent had increased prices for appropriating the benefit of tax reduction,” said the order.

 
The NAA directed commissioners of central GST (CGST) and state GST (SGST) to ensure that the amount profiteered by Samsung is deposited in the consumer welfare funds of the central and state governments.
 
In its defence, Samsung had called the case arbitrary. This is because applicants had submitted screenshots of price as listed on an online marketplace without giving any evidence to substantiate that the supply actually took place.
 
Samsung further said that the said TV model was being sold on Amazon.in, a third party marketplace. Also, Samsung was not the supplier but Jumbo Distributors Pvt Ltd and EP Electronic Paradise Pvt Ltd were.

 
The anti-profiteering mechanism is a three-stage process. There is a state-level screening committee for local complaints and a standing committee for national-level complaints. Then, there is an investigation by the directorate general of anti-profiteering and a probe by the decision-making body, the NAA.
 
Nestle and Johnson & Johnson are among companies that have contested the NAA’s orders against them in the high court and got a temporary stay.