Delhi HC asks L'Oréal to pay Rs 186.39 crore of GST profiteered amount

“The interest amount directed to be paid by the respondents as well as the penalty proceedings and further investigation by NAA in respect of other products sold by the petitioner are stayed till further orders," the judgment read, adding that the views expressed in the order are apply only to the instant matter, and will not affect either party during the final hearing.

During an investigation between November 15, 2017, and December 31, 2018, the Directorate General of Anti-Profiteering (DGAP) had found that L'Oréal did not pass the benefits of the tax, cut from 28 to 18 percent, on a wide range of goods including face wash, shampoo, hair colour, conditioner and some makeup products, etc.

The NAA had also tasked DGAP with finding out whether the benefits were passed on after December 2018, and file a report.

After studying the report, NAA heard both L'Oréal and DGAP, and rejected the company's claim that it has passed on the benefits. Further, the NAA said the commensurate reduction in the price of goods did not happen and ruled that the company has profiteered to the tune of Rs 186.4 crore by not passing on the benefit to its customers.

Abhishek A Rastogi, partner at Khaitan and Co, who has arguing more than a dozen anti-profiteering petitions, said, "The entire dispute can be divided into parts — constitutional validity and the computation of the profiteering amount. The court at this stage is hearing the arguments with respect to constitutional validity, and the arguments with respect to determining the quantum of profiteering comes into play after the court decides the provisions to be valid."

"In various cases, there will be a time gap from denial of stay till the matter is finally concluded to determine the quantum of profiteering. In such cases, the financial hardship and other factors will come into play to protect the petitioners," added Rastogi.