Cosmetic products are displayed for sale at a Patanjali Ayurved Ltd. store in New Delhi, India on Saturday. (Photographer: Udit Kulshrestha/Bloomberg)

GST Anti-Profiteering: Investigating Agency Wants To Widen Probe Against Patanjali

The GST investigation body intends to widen the probe against Patanjali Ayurved Ltd. for not passing the benefit of reduced tax rates to consumers, according to three people aware of the matter.

The Directorate General of Anti-Profiteering in a report said that Patanjali profiteered to the extent of Rs 176 crore on various consumer goods on which tax rates were reduced, according to one of the three persons cited earlier. The period of investigation covered was until August 2018, which is now likely to be extended till March 2019, the person said.

The period under review was extended after the National Anti-Profiteering Authority asked the directorate to reopen the probe against the maker of Dant Kanti toothpaste. That followed Patanjali’s objections to the investigating agency’s previous findings, saying it that had counted invoices more than once and inflated the profiteered amount, the second person quoted earlier said.

Consumer goods makers have been facing probes for not passing on GST benefits to consumers after rates were lowered. GST has an anti-profiteering provision. Besides Patanjali, other companies that the directorate found to have profiteered include Hindustan Unilever Ltd., Procter & Gamble Co. Ltd. and Nestle India Ltd.

“We’re cooperating with the Directorate General of Anti-Profiteering and have given detailed submissions along with errors of duplication found,” SK Tijarawala, a spokesperson for Patanjali, told BloombergQuint over the phone. “A re-examination has been ordered, and whatever documents or data the directorate asks for, we will submit them.”

Court Order To Determine HUL Probe

The directorate also wants to increase the time period under review for HUL, according to the people quoted earlier. But it awaits direction from the Delhi High Court, the first person said.

The earlier investigation against HUL, according to the Dec. 24 order of the National Anti-Profiteering Authority, was conducted between Nov. 15, 2017, and Feb. 28, 2018. The company, however, moved the Delhi High Court challenging the authority’s order that asked it to pay Rs 462 crore. The court has protected it from coercive action and penalty payments till it finally decides the matter.

Since the court has directed against coercive action, the directorate has put its investigation on hold, the second official said. The investigation agency intends to further probe whether HUL continued to make unjust profits after February last year, he said.

A spokesperson for HUL said the company hasn’t received any communication from the directorate seeking additional document