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Delhi High Court stays demand on HUL for Profiteering

The Delhi high court has stayed the Rs 462-crore demand made on Hindustan Unilever (HUL) by the National Anti-profiteering Authority (NAA). The HC has directed NAA that no coercive action be taken, and no penalty proceedings be continued against HUL until the final determination of the matter in the court. According to a statement by HUL, since the matter involves some issues that require a detailed examination of contentions of both the parties, the HC has asked the FMCG major to deposit Rs 90 crore in two instalments (Rs 50 crore by March 15, and Rs 40 crore by May 15) in the Consumer Welfare Fund.

NAA had, in its order dated December 24, 2018, concluded that HUL did not pass on the entire benefit to consumers when GST was reduced from 28% to 18% on home and personal care products in November 2017. According to NAA’s estimation, HUL profiteered around Rs 535 crore, of which Rs 455 crore was denial of benefit to consumers. A few companies that have been served anti-profiteering notices by NAA have obtained stay orders from the court. These include Hardcastle Restaurants, which is the franchisee of McDonald’s, and Pyramid Infrastructure. HUL has maintained that GST is a progressive reform that will benefit consumers and the industry at large.

However, in the absence of set rules and guidelines on profiteering, the company 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. During the transitionary period, HUL suo moto offered to pay to the government the benefits that accrued to the company, but could not be passed on to consumers. This amount aggregating to Rs 160 crore (including Rs 36 crore on behalf of redistribution stockists), has since been deposited with the Consumer Welfare Fund of the government.

 

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