• If the company follows through, this could be the first instance where a fast-moving consumer goods firm would move court against the NAA.
  • The backlash from the company comes after a lot of back and forth between the NAA and the FMCG giant over allegations that it bagged benefits from reduced tax rates.

Hindustan Unilever Limited (HUL), a renowned Indian consumer goods company, has reportedly announced that it is considering pursuing legal options against the National Anti-Profiteering Authority (NAA), a government watchdog that keeps the trading community’s unfair profit-making activities in check.

Reports cite, HUL intends to take the authority to the court after it sent the company a new order seeking approximately INR 2.23 billion. The authority has sent HUL several similar orders over the past year alleging that it bagged benefits due to reduced tax rates.

According to a report, the NAA claims that even though the government has cut the GST rates on a large amount of consumer products to 18% from the earlier 28%, HUL failed to lower the maximum retail price (MRP) of its products. Meanwhile, HUL claimed that it has kept the government notified regarding the manner & the approach it has adopted to pass on GST benefits to its customers.

The Mumbai-based company stated that the latest order from NAA makes a narrow interpretation of the law and fails to take a well-established, law-backed industry practice into consideration. The company is considering legal options that are available because of divergence on certain basic issues in ascertaining quantum of benefits that would be passed on to customers post-GST.

The latest NAA order has pegged the combined amount of tax benefit that has not been passed on by HUL to about INR 3.83 billion, after considering certain deductions. The company has already deposited around INR 1.6 billion voluntarily to consumer welfare fund.

This could reportedly be the first instance where a consumer goods firm would move court against the NAA.