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Nestle slapped with Rs 90 crore fine for not passing on GST benefits; this is what FMCG firm says

FE Online
nestle, fmcg

One of the leading FMCG companies Nestle has been slapped with Rs 90 crore fine by anti-profiteering watchdog NAA for not passing on the benefit of GST rate reduction to customers. The Maggi noodles-fame company's methods to pass on benefits were found to be ''illogical, arbitrary, and illegal, which has resulted in unfairness and inequality while passing on the benefit of tax reduction," the National Anti-profiteering Authority (NAA) said on Wednesday. The company deposited Rs 16.5 crore in the Consumer Welfare Fund last year, which was done by Nestle suo moto, the maker of Munch and KitKat said. Nestle is to deposit the remaining Rs 73 crore within the next three months, according to anti-profiteering regulator's orders. 

"Nestle India as a responsible corporate citizen has passed on the benefits of GST to consumers and will consider appropriate actions post studying the order by the National Anti-Profiteering Authority (NAA)," a Nestle spokesperson said in a statement. The company also said that it is passing on the benefits by either MRP reduction or increasing product quantity or grammage. "On SKUs where it was not practicable to pass on the benefits, say for example Nescafe single-serve packs for Rs 2 or Maggi Noodles Rs 5 packs, the benefit has been passed on other pack sizes within the same product category," Nestle added.  

In certain cases where the company could not pass on the benefit instantly by reduction in MRP or increase in grammage, "the amount was set aside, to be subsequently passed on and was not reckoned either in our sales or profits," Nestle said. However, the NAA maintained that the company must pass on the benefit of rate reduction for each stock keeping unit (SKU) instead of the product level. 

The GST committee had lowered the rates on over 175 products with effect from November 15, 2017. However, it was alleged that Nestle has not passed the benefit to the consumers and has been profiteering.