Jubilant FoodWorks has been slapped a notice under GST anti-profiteering rules for allegedly not passing on the benefit of tax rate cut to consumers of Domino's Pizza across its outlets, according to sources.
The Directorate General of Safeguards (DGS) had issued the notice to the company on January 25 after the standing committee under the GST anti-profiteering authority received a couple of complaints from consumers over pricing of food items sold at Domino's outlet.
Jubilant FoodWorks, which operates Domino's in India, in a late evening filing to the BSE said pursuant to the notice it has submitted its response on February 7 and March 12 to the DGS stating that no profiteering on account of GST has been made.
"The company has passed on the full benefit of GST to customers on account of reduction in GST rate," it said.
The DGS has further sought certain information/ documents which the company has submitted or is in the process of submission in a timely manner, the company added.
Jubilant is among the 15 companies to have got notice from DGS so far since the implementation of GST regime.
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As per the complaints sent to DGS, Jubilant was over-charging at Domino's Pizza outlets even after the GST rate was cut to 5 per cent from 18 per cent, a source told PTI.
In November 2017, the GST Council cut tax rates for all restaurants, except the ones located within hotels with room tariffs of Rs 7,500 and above, to 5 per cent. Prior to reduction, GST was 18 per cent for air-conditioned restaurants and 12 per cent for non-air-conditioned restaurants.
As part of its investigation, the DGS had asked the company to submit any document it wants to in order to defend its case.
"Jubilant has replied to the notice in its defence. We are analysing the response and if required further queries would be raised," the source added.
In its defence, the company had to give price list of pre and post GST reduction by Domino's Pizza in November.
"GST rate was reduced to 5 per cent, but without the benefit of input tax credit. However, the earlier 18 per cent was charged with input tax credit. So, DGS has to ascertain the propionate price reduction that Domino's should have passed on to customers," the source added.
After examining 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.
The DGS, entrusted with the task of investigating the cases of profiteering under GST regime, had in December 2017, served notices to franchisee of McDonald's family restaurant -- Hardcastle Restaurant. Besides, based on complaint filed by a departmental store, the DGS also sent notices to Lifestyle International and Honda dealer.
In January 2018, the DGS had served notice to HUL for not passing on the benefit of tax rate cut from 28 per cent to 18 per cent.
As per the structure of the anti-profiteering mechanism in 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.
The DGS is mandated to complete its investigation within 3 months, and may seek an extension of further 3 months from the standing committee.