Fashion retailer Lifestyle International Pvt Ltd. has got entangled in the crosshairs of anti-profiteering authority for allegedly not passing on the benefit of the goods and services tax rate cut to consumers.
In an order that sets an important precedent for such cases, the National Anti-Profiteering Authority directed Lifestyle to refund the profiteered amount, ordered the issuance of showcause notice to the company and asked the Director General of Anti-Profiteering to initiate a detailed investigation.
The authority directed the company to refund Rs 41, equivalent to the price reduction for one product that was not passed on, along with interest at 18% to the complainant and asked the Director General of Anti-Profiteering to investigate whether the company withheld such benefit for other products.
The DGAP will collect any such excess profit derived from other products and deposit the amount with the consumer fund. The show-cause to be issued to Lifestyle will ask why the company should not be penalised for violating the GST law. Tax experts said this was another important ruling that indicates how the authorities are considering the anti-profiteering concept.
“This case decides on the complaint but also issues order for investigation on other products sold. Further, a clear message that price reduction is required for each product and general reduction in prices does not make the business compliant,” said Anita Rastogi, a partner at PwC.
The complainant had alleged that the price of ‘Maybelline Fit Me Foundation’ sold by Lifestyle was not reduced after GST on the product was cut to 18% from 28% on November 15 last year. Lifestyle took the plea that the maximum retail price of a product was decided by the brand owner, which, in this case, was outside India.
The company submitted it could not be held non-compliant in absence of guidelines from the authority on how the benefit should be computed and passed on. It also argued that the scope of the investigation should not be extended on a pan-India basis and should be restricted to the complaint.