Director General of Anti-Profiteering Vs Nirma Limited (Competition Commission of India)
The Competition Commission of India (CCI) reviewed a case against Nirma Limited based on a report from the Director General of Anti-Profiteering (DGAP). The investigation focused on whether Nirma passed on the benefits of a GST rate reduction from 28% to 18% on detergent products, effective from November 15, 2017. Key issues included whether Nirma reduced the Maximum Retail Prices (MRPs) of affected products, whether reduced MRPs were communicated to distributors and reflected on product labels, and if Nirma unjustifiably increased base prices after the tax cut. The DGAP found that Nirma did reduce prices for some products but failed to reduce MRPs for others, instead maintaining the same base prices while applying the lower tax rate. The CCI noted that although Nirma passed on some benefits to its distributors, it did not fully comply with the legal obligation to ensure end consumers benefited from the tax reduction.
The DGAP report dated 27.01.2023 found discrepancies in the reduction of Maximum Retail Prices (MRP) for impacted products following a tax rate reduction. It noted that among 32 affected products, MRP reduction did not occur in 5 SKUs. Additionally, the Respondent adjusted MRP for 11 SKUs, increased product quantity for 8 SKUs, and discontinued 8 SKUs after the rate reduction. However, the DGAP highlighted that the Respondent did not uniformly reduce MRPs for all affected SKUs from 15.11.2017 onwards. As per Section 171 of the CGST Act, 2017, which mandates passing on benefits of tax reduction to consumers, the DGAP’s conclusion that there was no violation by the Respondent was deemed unacceptable. Therefore, the DGAP was instructed to reopen the investigation as per the Hon’ble Delhi High Court’s judgment dated 29.01.2024 and submit a revised report under Rule 133(4) of the CGST Rules, 2017.
