Hindustan Unilever
Reuters file

FMCG behemoth Hindustan Unilever (HUL) is reportedly considering "legal options" against an order passed by the National Anti Profiteering Authority (NAA) accusing the company of not passing on the rates cut after the introduction of GST to its customers.

In an order passed on December 24, the GST anti-profiteering authority had ordered HUL to deposit an amount of Rs 2.23 billion.

The FMCG major cleared its stance on the issue and said: "The NAA order refers to the need to pass on the benefit of reduction in rates to consumers which is fully consistent with HUL's stand and actions. However, it makes a narrow interpretation of the law and does not take into account well-established industry practice backed by law."

The company further added that "no methodology has been determined by NAA as required under law to determine if the benefit has been passed or not. Given there is a divergence on some basic issues, HUL will consider legal options available to it."

Business Standard reported that the company argued that it has always accepted Goods and Services Tax (GST) as a progressive tax which will benefit consumers and the industry both.

In a regulatory filing, it said: "In the absence of set rules and guidelines on profiteering, HUL has gone by the spirit of the law, and passed on the entire benefit received under GST to consumers - either through a reduction in prices or through an increase in grammage."

The company has further affirmed that it has informed the government of its approach and manner it has adapted to pass on the GST benefits to the customers of the company.

In its order earlier this week, the NAA said that although the GST council has slashed the rates of a large number of products from 28 per cent to 18 per cent but HUL failed to reduce the maximum retail price (MRP) of its products.

The GST anti-profiteering authority found the HUL of not passing the GST rate cuts benefits of around Rs 3.83 billion to its consumers.