Nestle Examining Show Cause Notice On GST Benefits
Packets of Maggi 2-Minute Noodles, manufactured by Nestle India Ltd., sit alongside other food products suspended from the ceiling in a basket inside a general store in Mumbai, India. (Photographer: Dhiraj Singh/Bloomberg)

Nestle Examining Show Cause Notice On GST Benefits

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Consumer goods firm Nestle India Ltd. on Wednesday said it is examining the show-cause notice slapped by the National Anti-profiteering Authority for not passing on Goods and Services Tax benefits to customers and take the next course of action in due course.

On Dec. 12, the NAA imposed a penalty of Rs 90 crore on Nestle India for not passing on the benefit on rate reduction to consumers.

"I respect the authority for the order they have passed. However, it is very unfortunate that despite all the evidence that we had provided them in terms of changes in grammage, changes in prices that we had effected we received this order," company's Chairman and Managing Director Suresh Narayanan told PTI on the sidelines of the Confederation of Indian Industry FMCG summit.

He further said that the company is examining the order and will take the next possible action in due course.

The authority held that Nestle’s methodology of passing reduction in the tax was “illogical, arbitrary, and illegal, which has resulted in unfairness and inequality while passing on the benefit of tax reduction”.

"As a company we were transparent. We went to the authority actually voluntarily suo-moto, as we have some part of GST money collected, which we were not able to pass on asking where it could deposit this money. We had also given them the methodology as there is no existing one. We told pragmatically what we can be done in terms of price and grammage change. Yet, they have issued this notice," Narayanan added.

He noted that if the products are for Rs 2 and Rs 5 and if the company had to pass benefits of 0.45 paise or 0.55 paise, there is no coinage to pass the benefit.

"We dont have 0.45 paise and 0.55 paise coins. So, how will I be able to pass on these benefits even if I want to. In smaller packs, it is difficult to give the benefit because there is no coinage," he said, adding that the company has passed on the benefit on Maximum Retail Price or by way of increase in grammage.

Narayanan also said that the company plans to be plastic neutral at least in its Maggi brand this year.

"By plastic neutral, we mean that we will not add extra plastic into the system but re-use the recycled plastic. We are starting with Maggi. We have already set up garbage collection, segregation and disposal plants in Mussoorie and Dharmashala and we are working with the local authorities there," he said.

He further said that the company has set a target to use a 100 percent recyclable plastic by 2025.

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