HUL profiteering case: Delhi HC stays Rs 462 cr demand by NAA

In a major relief to Hindustan Unilever Ltd (HUL), the Delhi High Court has stayed the demand of Rs 462 crore made by the National Anti-Profiteering Authority (NAA).

The NAA, set up under the Central Goods and Services Tax Act 2017 to check the unfair profit-making activities and to ensure that the benefits of the reduction in GST rates and proportional change in the input tax credit is passed on to the ultimate consumers, had passed its order last December 24, 2018.

The High Court (HC), while staying the demand, has directed the NAA that no coercive action be taken, and no penalty proceedings be continued against the fast moving consumer goods (FMCG) major until the final determination of the matter in the court.

Since the matter involves some issues that require a detailed examination of contentions of both the parties, the HC has asked HUL to deposit Rs 90 crore in two instalments by May 15, 2019, into the Consumer Welfare Fund (CWF). Accordingly, HUL will have to deposit Rs 50 crore by March 15, 2019, and Rs 40 crore by May 15, 2019, into the CWF by the stated deadline.

In a statement, HUL said the company has always maintained that the goods and services tax is a progressive reform which will benefit consumers and the industry at large. "In the absence of set rules and guidelines on profiteering, HUL has gone by the spirit of the law and passed on the entire benefit received under GST to consumers – either through reduction in prices or through increase in grammage," the company said.

It added that as a matter of good governance, the company had taken many steps keeping consumers interest in mind.

"For instance, during the transitionary period, HUL suo moto offered to pay to the government the benefits which accrued to the company but could not be passed on to the consumers. This amount aggregating to Rs 160 crore (including Rs 36 crore on behalf of our redistribution stockists), has since been deposited with the CWF of the government," HUL said in the statement, adding that during the entire process, it kept the government informed of the approach and the manner that it had adopted in passing on the GST benefits to consumers.

PARTIAL RELIEF

• Rs 90 cr – HC has asked HUL to deposit in two installments by May 15, 2019 into the Consumer Welfare Fund
   
• Rs 50 cr – Of Rs 90 cr HUL will have to deposit by March 15; the rest Rs 40 crore by May 15, 2019