The National Anti-Profiteering Authority (NAA) said Johnson & Johnson Pvt Ltd (J&J) profiteered from reduction in rates under the goods and services tax (GST), denying the benefit of lower rates to consumers. The profiteered amount stood at Rs230 crore, according to an order dated 23 December 2019.
The Director General of Anti-Profiteering had filed an application against J&J in the matter.
“It is evident from the facts that the respondent (J&J) has denied the benefit of tax reduction to the customers in contravention of the provisions of section 171(1) of the CGST (Central GST) Act, 2017, and has thus, profiteered as per the explanation attached to section 171 of the above Act,” the order said.
“Therefore, he (J&J) is liable for imposition of penalty under section 171(3A) of the CGST Act,” it added.
The authority, in its order, directed J&J to reduce prices of its products and asked the company to deposit Rs230 crore in consumer welfare funds (CWFs) of the central and state governments.
“…18% interest payable from the dates from which the above amount was realised by the respondent (J&J) from his recipients till the date of its deposits,” the authority said in its order.
J&J will have to deposit Rs230 crore to CWFs of the centre and state governments within three months from the date of passage of the order. In case the company fails to do so, commissioners under the central GST and state GST will recover the amount, said NAA, the quasi-judicial authority of the GST structure.
Himachal Pradesh, Punjab, Uttarakhand, Haryana, Delhi, Rajasthan, Uttar Pradesh, Assam, Bihar, West Bengal, Jharkhand, Odisha will receive deposits above Rs1 crore in their state CWFs.
In 2017, the government had introduced an anti-profiteering clause to ensure businesses transfer the benefit of the tax credit to consumers by making products cheaper.
The framework of the body comprises a standing committee, screening committees in every state as well as the Directorate General of Safeguards, now renamed as Director General Anti-Profiteering.
If consumers feel that the benefit of a rate cut is not being passed on to them, they can approach the state’s screening committee for relief.