The National Anti-Profiteering Authority (NAA) has fined Jubilant FoodWorks, which operates the Domino’s Pizza chain in India, Rs 41.42 crore for not passing on the benefit of a reduction in the goods and services tax (GST) to consumers. The company has been asked to deposit the amount with the government.
The order was passed on an e-mail complaint filed by a customer that Domino’s had not reduced the price of ‘stuffed garlic bread’ and ‘medium veg pizza’ even after the GST rate was cut to 5% from 18%. The GST council had cut rates on restaurants to 5% without input tax credit (ITC) from 18% with such credit, with effect from November 15, 2017. The authority held that Jubilant did not pass on the benefit of this reduction to customers during the period from November 15, 2017 to May 31, 2018.
It also asked the company to reduce prices of its products by way of commensurate reduction in taxes. “The respondent (Jubilant FoodWorks) is directed to refund to the applicant an amount of Rs 5.65 along with interest @18% from the date of charging the above amount from him till its refund. He is further directed to deposit the balance amount of Rs 41,42,97,629.25 in the ratio of 50:50 in the central and the state consumer welfare funds along with interest @18% till the same is deposited, within a period of three months,” the NAA said. The NAA also asked the Directorate General of Anti-Profiteering, which investigated the case, to conduct a further investigation post May 31, 2018, to check if the benefit of tax reduction was passed on to customers. The authority has also issued a show-cause notice to Jubilant FoodWorks to explain why a penalty should not be imposed on the company.