NAA investigates Patanjali distributors

By

Isabelle Crossley

Published
Feb 27, 2019

The National Anti-profiteering Authority is investigating a number of Patanjali’s distributors to see if they failed to pass on goods and services tax cut benefits to consumers as required. The anti-profiteering follows the NAA’s decision to fine Patanjali for the same.

The NAA sent notices to around ten of the Ayurvedic fast moving consumer goods brand Patanjali’s distributors for allegedly not reducing their prices to reflect changes to the GST. The NAA is now investigating the companies to ascertain whether they are guilty of profiteering or not.

Patanjali has already been fined Rs 150 crore ($22.55 million) by the NAA for failing to pass on GST cut benefits to consumers. The NAA stated that Patanjali failed to reduce prices despite tax reductions which were intended to benefit the consumer, not businesses. However, the matter is ongoing and Patanjali may appeal the decision. 

GST rates have been adjusted several times since the system replaced the old value added tax system in July 2017. Many other FMCG businesses including Johnson & Johnson, Hindustan Unilever, and Procter & Gamble have also been fined or investigated for failing to pass on GST benefits to shoppers. However, tax experts told ET Bureau that there is no set formula to find out whether businesses categorically failed to pass on GST cut benefits which presents a challenge for both the NAA and businesses alike. Businesses also have only limited control over how much their products retail for after being sold to a distributor.