Starbucks has been fined Rs 1.04 crore for not complying with GST cut benefits to customers. The National Anti-Profiteering Authority (NAA) directed Starbucks Coffee Company to pay the fine with 18 percent interest. The fine will go to central and state consumer welfare funds.
“The quantum of profiteering was estimated based on an investigation by the Director-General of Anti-Profiteering for the November 15, 2017-June 30, 2018 period.”, said an NAA official.
Starbucks has been ordered to reduce the prices of products so that the customers can enjoy the benefits of tax reduction. The complaint was filed by a consumer, accusing the company of not reducing the GST rate from 18 percent to 5 percent.
According to the complaint, the coffee chain increased the price of its short cappuccino from Rs 155 to Rs 170, after the GST rate reduction came into effect.
The NAA order for the company said, “increased the base price of food items and applied 5 percent GST, thereon, either maintaining the pre-rate reduction selling prices or even increasing them and this profiteering.”
Additionally, NAA pointed out, the benefit of tax rate reduction was not passed on to consumers due to the surges in the pre-rate reduction base prices to void the GST rate cut.
NAA continued, “the respondent has thus defeated the objective of both the central and state governments to provide the benefit of rate reduction to an ordinary consumer by sacrificing their tax revenue.”
On the whole controversy, the Tata group commented, “As a responsible business, Tata Starbucks will comply with the ruling. Starbucks intends to explore our legal options on the basis of our belief that we have followed the law in accordance with the revision of the GST structure.”
