The Silicon Review ^Asia

The National Anti-Profiteering Authority (NAA) has charged a Rs 230 crore penalty against Johnson & Johnson for making profits off the cut in goods and services tax rates (GST). The methodology adopted by the respondent (Johnson & Johnson) while computing the benefit of tax reduction was illogical, unreasonable, arbitrary, and incorrect, and hence cannot be accepted” the authority commented in an order on Tuesday. The authority said that it found it surprising that FMCG major had not added the tax cost and losses to process of products between July 1 and November 14, 2017 but had chosen to do so from November 15 when the prices reduced due to rate reduction to 18% from 28%.

“It is absolutely clear that the respondent (Johnson & Johnson) had no intention of passing on the benefit of tax reduction to consumers,” the NAA said. They further commented that the company that sells its produce through general, institutional and modern trade and exports were responsible for fixing the prices of its products as a manufacturer and hence cannot shift responsibility onto the retailers who continue to sell the products at pre rate-reduction prices.

Johnson &Johnson has been allowed three months to comply with the fine and has been further instructed to reduce its prices commensurately.