NAA holds L‘Oreal guilty of not passing Rs 186 crore tax cut benefit to consumers

The National Anti-profiteering Authority (NAA) has held global cosmetics giant L‘Oreal guilty of not passing the benefit of reduction in tax rate to consumers to the tune of Rs 186 crore.
Image of cosmetics used for representational purposes(File photo | ENS)
Image of cosmetics used for representational purposes(File photo | ENS)

NEW DELHI: The National Anti-profiteering Authority (NAA) has held global cosmetics giant L‘Oreal guilty of not passing the benefit of reduction in tax rate to consumers to the tune of Rs 186 crore. The anti-profiteering authority has ordered the company to deposit the sum with 18% interest in Consumer Welfare Fund.

The investigation arm of the anti-profiterring authority -- Director General Anti-Profiteering (DGA) -- found L’oreal did not pass on the rate reduction benefit after the GST Council reduced rates in November 2017. L’Oreal in its defence argued that it reduced rates after the decision of the GST Council by way of increasing quantity in case of shampoos, conditioners, and color naturals and there were no guidelines or methodology given by the government to pass on the benefits to end consumers. However, rejecting this defence, NAA said that increase in grammage is not in any way equivalent or akin to commensurate reduction in prices. It said the company was only required to maintain the base price of the items and change the GST rates from 28% to 18% in its billing software.

“Benefit was required to be passed on by commensurate reduction in the price and not by post supply discounts or incentives,” the anti-profiteering authroity said in its order. “L‘Oreal was required to fix and display revised MRPs because as a manufacturer it was legally responsible for fixing revised MRPS as per legal metrology rules, and if the company was not capable of doing that, it could have simply deposited the profiteered amount in the Consumer Welfare Fund (CWF), however, it had no bonafide intentions and continued to sell its products at pre-rate reduction MRPs,” it said.

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