Bars of Hindustan Unilever Ltd. Lux soap are displayed for sale on a shelf at a store in Mumbai, India. (Photographer: Kuni Takahashi/Bloomberg)

Directorate General Of Safeguards Gets Three More Months To Probe HUL Profiteering Case

The Directorate General of Safeguards has got a three-month extension till mid July to probe into alleged profiteering by fast-moving consumer goods major Hindustan Unilever Ltd., according to a person with information of the development.

On Jan. 16, DGS had served profiteering notice to the company for allegedly not passing on the goods and services tax rate reduction benefit to consumers.

DGS had sought details from HUL about the prices of its entire range of products pre and post GST rate cut in November last year.

Even though HUL replied to the notice, the investigating authority asked for more information from the company which in turn sought more time to submit documents saying that the final accounts were being prepared as financial year was ending.

“Following that, DGS sought a three-month extension from the Standing Committee under the anti-profiteering authority. The extension till mid July has been granted to finalise the report on HUL,” the person quoted above told news agency PTI.

The anti-profiteering rules mandate DGS to complete its investigation within three months of notice. It may, however, seek an extension of further three months from the standing committee in case the investigation is not completed.

Meanwhile, HUL has offered to pay Rs 155 crore so far to the government to compensate for the gains it made by not passing on the rate cut benefits to consumers.

The person quoted above further said the amount has not been accepted pending investigation against the company.

HUL had said while the revised GST rate was initiated immediately on Nov. 15, there was a lag on account of time required to change artworks on various products, order packing material, production and ensuring availability in stores.

“Hence, it was not possible to immediately pass on the benefit of the Nov. 15 GST rate reductions to the end consumers,” HUL had said.

As part of investigation, DGS usually looks into  company's balance sheet, profit and loss account, GST returns and details of invoice wise outward taxable supplies.

The company is given a fortnight time to respond to the notice.