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GST Probe Unit Accuses L’Oréal India of making Rs 215-Crore undue profit

A Cosmetics maker company L’Oréal India has been accused by the indirect tax anti-profiteering unit of making an undue profit worth Rs 215 crore.

It was found by the Directorate General of Anti-Profiteering that the company didn’t pass on the benefit of a reduced Goods and Services Tax rate on a range of products.

The company didn’t cut prices of shampoos and make-up products after the GST was lowered to 18 percent from 28 percent.

In December also, the National Anti-Profiteering Authority had found a distributor of L’Oréal India guilty of profiteering by not passing the GST rate cut on hair color to customers and imposed a Rs 3.4-lakh penalty.

Besides L’Oreal, the anti-profiteering authority had in December last year ruled that Hindustan Unilever Ltd. had made an undue profit of about Rs 535 crore against the company’s claim of Rs 160 crore.

Hindustan Unilever Ltd., India’s largest consumer goods maker challenged the move in the Delhi High Court, which stayed the demand.

It then widened the investigation to find out if the company had lowered the prices.

A spokesperson for L’Oréal India, which sells the branded products of L’Oréal, Garnier, and Maybelline said that the company has taken appropriate measures to pass the benefit of GST rate cut to customers.

Further added, “We are in dialogue with the National Anti-Profiteering Authorities to fully understand their calculations and address any queries they may have. We hope they will duly consider the merit of the methodology adopted by L’Oréal India and take a fair view of the matter.”

The anti-profiteering unit has accused other consumer goods makers, including Patanjali Ayurved Ltd., Procter & Gamble Company, ITC Ltd., among others, of not passing on the benefit of the lower tax rate to consumers.

However, the cases are pending with the GST anti-profiteering authority.

Author: Niranjan Reddy

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