Maggi-maker Nestle India is examining the show-cause notice sent by National Anti-profiteering Authority (NAA) for not passing on GST benefits to customers.
"It is very unfortunate that despite all the evidence that we had provided them in terms of changes in grammage, changes in prices we received this order. We respect the order, we will examine the order and take the next possible action. We were very transparent, we voluntarily went to the authority, saying that we have some part of the GST money that we are not able to pass on, so where should we deposit this money. That's how the discussion started and then we gave them exactly the methodology, but there is no existing methodology," said Suresh Narayanan, Chairman and Managing Director, Nestle India.
On December 12, NAA imposed a penalty of Rs 90 crore on Nestle India for not passing on the benefit on rate reduction to consumers. 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'.
He said 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 don’t have 0.45 and 0.55 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.
Narayanan said the benefits were largely passed on by way of reduction of Maximum Retail Price (MRP) or by way of increase in grammage.
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