The GST anti-profiteering authority has found a distributor of Johnson & Johnson (J&J)guilty of not passing on the tax rate cut benefit of over Rs 5 lakh to consumers.
The case before the National Anti Profiteering Authority (NAA) states that the distributor had hiked the base price of two products -- J&J baby shampoo 100ml and J&J baby powder 200gm -- after the GST Council slashed tax on them to 18 per cent from 28 per cent on November 15, 2017.
The Directorate General of Anti Profiteering (DGAP), which investigated the complaint against the said distributor, went through its books of accounts for the period November 15, 2017 to March 31, 2018.
It was found that the base price of the baby shampoo was increased from Rs 57.24 to Rs 62.10 a piece following the November 15 rate cut. Similarly, the base price of the baby powder was increased to Rs 87.67 from Rs 80.82 a piece.
NAA, while asking the distributor to deposit over Rs 5 lakh to consumer welfare fund, directed it to reduce the prices of all the products by making commensurate reduction in their rates.
"The respondent (distributor) is directed to deposit the profiteered amount of Rs 5,01,646 along with the interest to be calculated at the rate of 18 per cent from the date when the above amount was collected by him from his customers," NAA said.
NAA also asked DGAP to further investigate the quantum of profiteering made by the distributor from April 1, 2018, and submit its report to the authority.
EY Tax Partner Abhishek Jain said :"A critical aspect to be noted in this ruling is that the responsibility of compliance with anti-profiteering provision is on the seller of the products and a retail dealer selling goods to the end customer cannot shift his accountability of this compliance to the original manufacturer of the goods".