Recently, according to report, the GST Appellate Tribunal, Delhi (GSTAT) has found Raj & Co., a distributor of L’Oréal India products, guilty of profiteering by failing to pass on GST rate-cut benefits to consumers. In its order dated August 18, 2025 (DGAP vs. Raj & Co. [NAPA/19/PB/2025]), the Tribunal directed the distributor to deposit Rs. 3.31 lakhs, along with 18% interest, into the Consumer Welfare Fund under Section 171 of the CGST Act.
The case arose from a complaint received by the Directorate General of Anti-Profiteering (DGAP), alleging that Raj & Co. did not implement the reduced GST rate on cosmetics, which was lowered from 28% to 18% effective November 15, 2017, under Notification No. 41/2017-CT (Rates). Investigations confirmed that while the GST rate had been cut, the distributor did not proportionately reduce prices on 388 products and instead raised base prices, leading to undue profiteering.
Raj & Co. argued that its sales operations were controlled through L’Oréal’s software “Suvidha,” limiting its pricing discretion. However, L’Oréal refuted this, asserting that distributors were responsible for ensuring price adjustments and passing on benefits to consumers. An earlier order of the National Anti-Profiteering Authority (NAA) for the period November 2017 to March 2018 had similarly rejected Raj & Co.’s claims of lack of control over pricing.
The Tribunal, citing the distributor agreement, noted that Raj & Co. retained discretion to offer discounts and adjust base prices, and therefore could not shift responsibility to the manufacturer. Since the distributor failed to pass on the tax benefit despite clear obligations, GSTAT held it guilty of profiteering.
