Domino’s implicated for not passing on lower GST rate benefits to consumers

INDIA – Domino’s Pizza, a restaurant chain operated by Jubilant FoodWorks in India is under investigation by anti-profiteering authorities for not passing on goods and services tax (GST) benefits to consumers after reducing and slashing the rates on several products.

According to anti-profiteering provisions, companies were to pass on any benefits from a lower GST rate to consumers on a mandatory basis.

Investigations carried out by the Directorate General of Anti-Profiteering found that Domino’s had not reduced the prices of all its products after GST Council cut the tax rate on restaurants last November, and instead passed on the benefit selectively.

But according to a Jubilant spokesperson not named by ET Retail, the company had passed on the benefits to customers.

“The company has received a copy of the investigation report submitted by the Director General Anti-Profiteering (DG) to the National Anti-Profiteering Authority (NAA).

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However, JFL believes it has passed on the benefit on account of reduction of GST rates to the customers and accordingly will represent its case before NAA,” said the spokesperson in an email to ET Retail.

Appeasing businesses and consumers

The GST Council went ahead to slash tax rate for restaurants from 18% to 5% in November last year, analysts terming the move to be politically motivated especially in anticipation of the general elections.

GST framework was effective July 1, 2017 with a goal protect consumers from any runaway price rise post the roll out.

However, there are no guidelines for businesses on anti-profiteering and it has been left to their wisdom to pass on tax benefit in the manner they deem right.

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The chain has been connected to not passing tax benefits to all consumers, whose complaints have been put under investigations by standing and screening committees at national and state levels, respectively.

Though it damages the government budget through tax loss, reduction of GST on items will boost consumption in the economy and is likely to have a positive impact on the domestic manufacturing ecosystem.

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