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Indian anti-profiteering body levies penalty on Nestle

MUMBAI
2019-12-12 16:19

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MUMBAI, Dec. 12 (Xinhua) -- India's National Anti-Profiteering Authority (NAA) has levied a penalty of 12.6 million U.S. dollars on the Indian consumer company of the Swiss Multinational - Nestle India for not able to pass on the commensurate benefits of Goods and Service Tax (GST) to its customers.

As per a statement issued to the Bombay Stock Exchange by Nestle India on Thursday, the company has already deposited 2.3 million U.S. dollars into the Consumer Welfare Fund. The authority has stipulated that the penalty amount be deposited within three months from the date of the order.

"In absence of specific rules or regulations on profiteering, for rate changes effective 15th Nov, 2017 & 25th Jan, 2018 impacting our products, Nestle India adopted the spirit of GST law, by adopting a reasonable, pragmatic and market sustainable approach to pass commensurate GST rate reduction benefits. With this as the underlying spirit, Nestle India approached NAA, to clarify on the methodology to be followed and in turn explained our methodology," Nestle India said in a statement, which makes Maggi noodles, Kitkat and Munch among other consumer products.

"We are disappointed that NAA has not accepted the methodology adopted by us to pass on the GST rate reduction benefit and are studying the order passed and will consider appropriate action as advised," the statement said.

The anti-profiteering authority in its order issued earlier this week, held that the benefit of rate reduction was to be passed on for each stock keeping unit (SKU) and not at the product level. It observed that the said benefit was not passed on for some SKUs, while more than the required benefit was passed on in other SKUs within a category.

According to Nestle India, the tax benefits were passed by way of reduction in maximum retail prices or by way of increase in grammage and where it was not practical to pass on the benefit for low ticket price products, the benefits have been passed on other pack sizes within the same product category.
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