Court stays notice on Johnson & Johnson

The Delhi High Court on Tuesday stayed a show cause notice issued to Johnson & Johnson Pvt Ltd. for allegedly resorting to profiteering by not passing on the benefit of tax reduction to buyers of its sanitary napkins.

A Bench of Justice Vipin Sanghi and Justice Sanjeev Narula stayed the notice issued by the National Anti-Profiteering Authority (NAPA) to Johnson & Johnson and said no penalty proceedings will be initiated till the next date of hearing on September 24.

Johnson & Johnson had challenged NAPA’s November 21, 2019 order which stated that it did not pass on the commensurate benefit of reduction in the rate of tax to its recipients between July 27, 2018 and September 30, 2018.

The NAPA order had stated that Johnson & Johnson profiteered ₹42.7 crore in contravention to the provision of the Central Goods and Services Tax Act.

“In terms of Rule 133(3)(a) of the CGST rules, the company has been directed to reduce its price by way of commensurate reduction keeping in view the reduced rate of tax,” the plea said.

It, however, said prior to July 27, 2018, sanitary pads/ napkins were leviable to Goods and Services Tax (GST) at the rate of 12%. With effect from July 27, 2018 the said products were fully exempted from payment of GST.

“However, as the products became exempt, the Petitioner [Johnson & Johnson] could not avail any Input Tax Credit [ITC] and hence admittedly there was an increase in input costs of the products,” the plea claimed.

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Printable version | Apr 4, 2020 6:06:19 PM |

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