Ramdev's Patanjali Fined Rs 75.08 Crore For Not Passing On GST Benefits To Customers
Patanjali Ayurveda, the FMCG brand promoted by yoga guru Baba Ramdev has been found guilty of profiteering by the National Anti-Profiteering Authority (NAA) for not passing on the benefits of goods and services tax (GST) rate reduction on to the consumers.
According to NAA, Patanjali did not pass on the benefit of a GST rate reduction that came into effect in November 2017, and also hiked the base price.
"The respondent (Patanjali) has denied the benefit of tax reduction to consumers in contravention of the Central GST Act... therefore a show cause notice be issued directing it to explain why the penalty should not be imposed," NAA said.
The Economic Times reported that the company has been directed to deposit Rs 75.08 crore under the GST anti-profiteering provisions to the Consumer Welfare Fund (CWF).
Patanjali reportedly argued that discounts were given through a cash-back scheme. However, the NAA insisted that the benefit of a tax rate cut should be passed on to consumers via a ¡®commensurate reduction in the prices¡¯.
Cash-back schemes are run by FMCG firms to promote sales, and are not related to tax cuts, it observed.
Patanjali is not the only FMCG company that has come under the scanner of the anti-profiteering regulator. Recently, HUL and Nestle were also asked to pay up as fine for profiteering.
This comes at a time when Patanjali which took the Indian FMCG scene by storm when it debuted as a 'desi brand' is struggling to find its foothold in the market.
The company which dethroned FMCG giants like HUL in the Indian market has been reduced to a shadow of its former self.
The company could not maintain its momentum has been plagued with several issues like quality, competitive pricing, lack of renovation, inability to crack general trade distribution, dilution of the ayurvedic credentials on an excessive extension, a strong competitive response from large companies with their own ayurvedic offerings, and a sharp drop in advertising spend.
In the past few years, the Patanjali brand has almost gone missing from most supermarket chains and departmental stores.
This is a far cry from a few years ago when Ramdev openly challenged the MNCs and claimed that by 2025,?Patanjali?will be the biggest FMCG brand in the world.
It was also once one of the biggest advertisers in the country but has almost disappeared from TV.?
Ramdev and Patanjali CEO Acharya Balkrishna had recently claimed that the company will be back to its glory days soon.
