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Maggi – the 10th case for National Anti-Profiteering Authority

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Maggi – the 10th case for National Anti-Profiteering Authority
By: Prasanna CP
October 11, 2018
  All Articles by: Prasanna CP       View Profile
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The National Anti-Profiteering Authority has issued several order in the consumer sector addressing issues with respect to passing the benefits of reduction in GST rates to consumer by way commensurate reduction in selling price. Let us discuss about the recent order issued by the authority on sale of Maggi.

Background of the case:

A consumer has purchased Maggi Noodle packs, each weighing 35 grams having MRP of  ₹ 5 from the seller. Prior to 15.11.2017, the seller was charging 18% GST on the product’s base price of  ₹ 3.96 per pack, however, after the GST rate was reduced from 18% to 12% with effect from 15.11.2017, the Seller had started charging 12% GST on the product’s increased base price of  ₹ 4.17 per pack. The consumer alleged that the seller had increased the base price of the product from  ₹ 3.96 to  ₹ 4.17 after the GST rate applicable on the product was reduced from 18% to 12% and also claimed that by increasing the base price of the product it’s cum-GST price had remained unchanged at  ₹ 4.67 which showed that the seller had not passed on the benefit of the reduction of GST rate to the consumer.

The consumer (Applicant) through email dated 29.11.2017 filed an application to standing committee on Anti-profiteering under rule 128 of the CGST Rules, 2017. The Standing committee further referred the matter to Director General Anti-Profiteering (DGAP) for investigation. DGAP called up the seller (Respondent) retail seller of nestle products to submit reply along with relevant documents.

Using legal tender issues as camouflage:

The Respondent submitted that he had passed on the benefit of GST rate reduction in respect of the product bearing MRP of  ₹ 5 through other packs of Maggi Noodles having different basic weights. The Respondent had further submitted that in the case of the product the price reduction would have been around 21 paise to the retailer and around 25 paise to the ultimate consumer which would have been inconvenient to both the retailer and the consumer due to legal tender issue, whereas on Maggi Noodles pack of 70 grams bearing MRP of ₹ 12 per pack, the benefit on account of GST rate reduction for the retailer would have been approximately 56 paise against which the respondent had reduced the price by 92 paise with reduced MRP of ₹ 11 and thus, the benefit in respect of ₹ 5 MRP pack had been passed on by reducing the price of other packs of Maggi Noodles by more than what was required. Therefore, the Respondent had claimed that the benefit of GST rate reduction had been passed on in respect of Maggie Noodles as a whole.

Absence of clarity in rules:

Before arriving at the conclusion the DGAP noted that under section 171 (2) of the CGST Act, 2017 it was required to determine whether the reduction in tax rate had actually resulted in commensurate reduction in the prices but there was no prescription either under the act or the rules which required that the benefit had to be passed on in respect of each product separately.

The pricing of the products was a complex exercise and they were usually not priced individually. Though the products sold differs in grammage; all the final products are produced under common production process incurring common costs which is both direct as well as indirect costs. Also pricing depends on several considerations such as those of demand, supply, product range, supplier’s market and market size and entity level operational costs etc.

Issues to be settled:

1) Whether the benefit accrued due to reduction in the rate of tax of one product can be passed on through another product or not?

2) Whether there was any violation of the provisions of Section 171 of the CGST Act, 2017 in this case? If yes, then what was the quantum of profiteering?

After careful examination of DGAP’s report and submissions from both applicant and respondent, the following observations were made by the Anti-Profiteering Authority.

Product of concern

MRP per pack

Period of sales: 1st Nov to

14th Nov 2017

Period of sales: 15th Nov 2017

to 28th Feb 2018

Amount charged

Base price

GST rate

Amount charged

Base price

GST rate

Maggi 35 grams








  • The respondent is required to reduce the MRP of the product by taking into effect of the reduction in rate of tax. The respondent further required to fix the MRP as per the provisions of the Legal Metrology (Packaged Commodities) Rules, 2011.
  • As per rule 2(m) “retail sale price” means the maximum price at which the commodity in packaged form may be sold to consumer and the price shall be printed on the package after taking into account the fraction of less than fifty paise to be rounded off to the preceding rupee and fraction above fifty paise and up to 95 paise to be rounded off to 50 paise. Hence, the respondent has no legal authority to fix MRP arbitrarily.
  • It is further apparent from the record that the respondent has contended that he had passed on the benefit in respect of the product by way of reducing the MRP of the Maggie 70 grams. But the respondent has no such liberty to arbitrarily decide in respect of which products he would pass on the benefit and in respect of which products he would not pass such benefit.
  • As per the provisions of Section 171 of the Act the benefit has to be passed on to each recipient and the same cannot be selectively granted or denied. It is also clear that the Maggi Noodle pack of 35 grams is distinct from a 70 grams and both the packs may be bought by the different recipients/customers and hence the benefit accruing to one customer cannot be given or denied to another nor can the benefit given to one set of customers arbitrarily enhanced and set off against the another.
  • Based on the perusal of the facts and sales figures it is clear that the respondent has not passed on the benefits of reduction in the GST rates to the consumers by way of commensurate reduction in prices, since the actual buyers of product Maggi 35 grams doesn’t get reduced price benefit. This amounts to violation of section 171 of the CGST act, 2017.
  • With reference to the above observations the quantum of profiteering for the period of concern 15th November to 28th Feb 2018 is computed as follows:

Qty Sold

Amount charged

Commensurate price per unit

Profiteering per unit

Total profiteering







The National Anti-Profiteering Authority vide order no. 10 dated 9th October directed the respondent (retail seller Kunj Lub Marketing Private Limited) to settle/deposit the profiteering amount along with the applicable interest at the rate 18% per annum.


By: Prasanna CP - October 11, 2018



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