A Noodled Swindle? Nestle Alleged To Have Profiteered By Rs 100 Crore By Not Passing On GST Benefits To Customers 

Premium food brand Nestle is in deep trouble. In an investigation into an anti-profiteering complaint filed against Nestle India, the Directorate General of Anti-profiteering (DG-AP) has found that the company indulged in profiteering of over Rs 100 crores, as reported by News18.

The GST Council had announced GST rate cuts on around 175 products with effect from 15 November 2017 and the government had asked firms to reduce the prices of their products so as to pass on the benefits to the ultimate consumers. Consequently, the government also set up the NAA (National Anti-profiteering Authority) to look into matters of excessive profit-making by firms.

The DG-AP, which is tasked with making the initial investigations into anti-profiteering complaints, prepares a report on its findings and submits it to the NAA. The apex body then arrives at a decision after reviewing the DG-AP reports and hearings from the accused.

Nestle India, which has brands like Maggi and Nescafe under its ambit, has responded to the complaint. Its spokesperson stated to The Hindu Business Line that the company as a “responsible corporate citizen” has passed on the benefits of GST to consumers. “We wish to reiterate that in situations where the benefit could not be passed on instantly by reduction in Maximum Retail Price or increase in grammage, the amount was set aside to be subsequently passed on and was not reckoned either in sales or in profit.”

The company also noted that it has deposited a provisional amount of ₹16.58 crore in the Consumer Welfare Fund. If the companies could not correctly identify the customer to whom the benefits of GST reduction should be passed on to, then the same amount can be transferred to this fund. “If money is collected (by a company as profit) without passing on the tax benefits, then it will go to the consumer, and if not possible, then the Consumer Welfare Fund,” Sachin Menon, partner and head, indirect tax, at auditor KPMG, said in an interview to Mint. “However, guidelines governing this are yet to be issued.”