Red sanders seizure, GST anti-profiteering case spell trouble for Ramdev’s Patanjali Ayurved

Stuck in two different cases, tax troubles seem to have cornered Baba Ramdev’s Patanjali Ayurved Ltd this time.

According to government officials, Patanjali has been summoned by two different revenue intelligence agencies of the Central Board of Indirect Taxes and Customs (CBIC) – one by Directorate of Revenue Intelligence (DRI) and the other by Directorate General for Anti-Profiteering (DG-AP).

In the first case, Patanjali Ayurved, the company chief financial officer (CFO) -- YD Arya and eight other senior officials of the company have been issued a show cause notice.

“Show cause notice was issued on August 1, 2018 by DRI,” government officials told CNBC-TV18.

The notice was issued regarding seizure of over 51 MT of red sander logs on February 17, 2018, official added.

Red Sanders is a rare kind of sandalwood that is in high demand in international markets especially, China, Japan, the Middle East, Sri Lanka, Bhutan and Nepal. Its export is banned and DRI in various drives has come up with measures to curb its smuggling.

However, in the case of Patanjali Ayurved, DRI’s Delhi zone division, which has sent the show cause notice has alleged that Patanjali Ayurved Ltd was exporting the red sander logs, which did not match to the code mentioned on the logs, thus hinting at alleged smuggling.

When CNBC-TV18 approached Patanjali Ayurved Ltd, the company spokesperson confirmed the receipt of the show cause notice and said that a detailed reply to DRI is under process.

In the second case, Patanjali has been summoned by DG-AP, which again has been issued to Patanjali's CFO -- YD Arya for alleged profiteering by the company.

“DG-AP over the last few months has been carrying investigations on Patanjali Ayurved Ltd on the allegations that the company did not passed on the benefit Goods and Services Tax (GST) rate cuts announced in November, 2017," government officials told CNBC-TV18.

"DG-AP has been communicating with Patanjali for various documents and information and since the company was not responding, DG-AP issued summons to the CFO to appear before DG-AP in 10 days," government officials added.

Patanjali's CFO is likely to appear before DG-AP on September 10, the company spokesperson told CNBC-TV18 in an email response.

The company also confirmed the receipt of summons and its spokesperson said, "Arya will submit necessary records of sales invoices and GST returns to verify whether reduction in GST rates has been passed on to the consumers or not.”

So far, big names such as Hindustan Unilever, Jubilant FoodWorks, McDonald’s franchisees have been slapped with notices among others.

However, penalties have not been imposed in any of these cases and investigation is underway at various levels of set up crafted to curb profiteering.

Let’s see what will be the final outcome of these two cases and the decision the revenue department finally takes.