The Goods and Services Tax Appellate Tribunal (GSTAT) has directed instant noodle manufacturer CG Foods, which produces the Wai Wai brand, to deposit ₹90.9 lakh into the Consumer Welfare Fund after finding the company guilty of profiteering by not passing on the benefit of a GST rate reduction to consumers.
In its recent order, the Delhi bench of the tribunal upheld the findings of the Directorate General of Anti-Profiteering (DGAP), which concluded that CG Foods increased the base prices of its instant noodles even after the GST rate on the product was reduced from 18% to 12% with effect from November 15, 2017. The violation was determined to have occurred between November 2017 and December 2018.
Under Section 171 of the Central GST Act, businesses are required to transfer any reduction in tax rates or input tax credits to consumers through commensurate price cuts. The tribunal cited invoice data showing that the post-tax commensurate price for a carton of Wai Wai Chicken Noodles should have been ₹226.66, whereas the company charged ₹237.57, treating the difference as excess recovery.
CG Foods argued that it faced sustained cost pressures during the relevant period, including rising prices of wheat flour, palm oil, spices, packaging materials, and freight, while also operating in a highly competitive instant noodles market that limited pricing flexibility. The company added that its maximum retail price (MRP) had not been increased.
Rejecting the defence, the tribunal held that most of the cited cost increases had occurred before the GST rate cut and therefore could not justify a post-reduction rise in base prices. Citing a Delhi High Court ruling in Reckitt Benckiser India Pvt Ltd v. Union of India, the bench said the company failed to establish any cogent basis for the price hike.
However, GSTAT declined to impose interest or penalties, noting that the statutory provisions enabling such levies came into force only after the period during which the violation occurred. The tribunal has also directed CG Foods to submit a compliance report to the tax authorities within four months.