DGS Asks Clarification From HUL Regarding GST Benefits

The Directorate General of Safeguards (DGS) recently asked Hindustan Unilever about clarifications regarding the methodology used by the company in reaching Rs 119 crore to the government after it was not able to pass the GST benefits to customers.

An HUL representative said, “DG Safeguards has sought some further clarifications on methodology and requested some supporting documents pertaining to the earlier issue in response to earlier communication with us. We are in the process of submitting those clarifications.”

From the last two months, Directorate General of Safeguards (DGS) has been continuously putting a check on companies that the benefits of lower levies are transferred under new indirect tax regime to the end users. In November, the GST council has reduced the tax rates regarding 200 products, comprising washing powder, chocolates, shampoo, toothpaste, and shaving creams to 18% from existing 28%

At the time of quarterly earnings announcement by the HUL last month, the company mentioned that this revision in rate cut could not be reflected on some products in the line and approximately Rs. 119 crore in the November and December month was revealed to the Central Board of Excise and Customs in order to pay in a contract to the government. The spokesperson further said, “The amount for January is in progress and will be shared in due course of time.”

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The company has not mentioned the sum of revenue and is keeping the amount as a liability in its mentioning in books. In relation to the latest frauds under GST, this particular issue had taken the headlines for illegally profiteering under the GST ambit.