DGAP Vs Raj & Co (GST Appellate Authority)
The Principal Bench of the GST Appellate Tribunal (GSTAT) dealt with an anti-profiteering case concerning M/s Raj & Company, a distributor of M/s L’Oreal India Pvt. Ltd. The issue was whether the distributor profiteered ₹3,31,879 by not passing on the benefit of GST rate reduction on cosmetics products from 28% to 18% with effect from 15.11.2017, during the period 01.04.2018 to 31.12.2018.
Background
The GST Council, vide Notification No. 41/2017-Central Tax (Rate) dated 14.11.2017, reduced GST on cosmetics from 28% to 18% effective 15.11.2017. Section 171 of the CGST Act, 2017 mandates that suppliers pass on such benefits through commensurate reduction in prices. The National Anti-Profiteering Authority (NAA) was constituted in 2017 to enforce this provision.
A complaint alleged that FMCG companies, including Garnier Laboratories (a L’Oreal group entity), had not reduced prices despite the tax cut. The matter was referred to the Directorate General of Anti-Profiteering (DGAP), which investigated and reported that Raj & Company increased base prices, thereby neutralising the tax reduction.
In December 2018, NAA (Order No. 25/2018) found Raj & Company guilty of profiteering for the period 15.11.2017 to 31.03.2018 and directed it to deposit ₹3,43,109 with interest at 18%. The company accepted the order and made payment.
For the subsequent period (01.04.2018 to 31.12.2018), DGAP again found profiteering of ₹3,31,879. In parallel, NAA had earlier confirmed profiteering of over ₹186 crore against L’Oreal India for the same products and period (Order No. 26/2022).
