GST impact: Consumer goods firms say can’t recall old stocks

The department of consumer affairs had on July 7 asked the consumer goods companies to print the revised MRP of goods produced before July 1 or face punishment, including a year in prison and a fine of up to Rs 1 lakh

Consumer goods firms facing action for violating MRP (maximum retail price) norms post GST implementation have expressed inability to recall old stocks from lakhs of retailers and put stickers with revised prices on them in a short notice.

An Indian shopkeeper arranges goods on a shelf inside his shop in New Delhi on August 3, 2016. Finance Minister Arun Jaitley said India was on the cusp of its biggest tax reform since independence ahead of a vote in parliament later August 3 on a new national sales tax. The Goods and Services Tax (GST) will replace a patchwork of central and state levies on goods and services and is one of Prime Minister Narendra Modi's biggest reforms since taking power in May 2014. / AFP PHOTO / SAJJAD HUSSAIN(AFP File Photo)

The FMCG (Fast-moving consumer goods) companies — most of them multinationals — producing bottled water, carbonated drinks, biscuits, toothpastes, soaps, oats and other packed food and beverages claim they have started putting revised MRP on their products, which will be available to the consumers in the next 7-10 days.

Post GST implementation on July 1, the prices of some products such as bottled water have reduced.

A bottle of mineral water with already printed MRP of Rs 20 continues to sell at the same rate despite the fact that the tax on it has reduced from 21% to 18%.

This means it should be sold at 60 paisa to Rs 1 less than the printed MRP — at around Rs 19.

The department of consumer affairs had on July 7 asked the consumer goods companies to print the revised MRP of goods produced before July 1 or face punishment, including a year in prison and a fine of up to Rs 1 lakh.

On Monday, the representatives of India’s top-notch FMCG companies, including Coca Cola and Pepsi, under the umbrella by FICCI, CII, ASSOCHAM and PCDCCI met consumer affairs joint secretary P Venkata Rama Shastri to express their concern.

Bottled water producers told the officials they had started packaging their products with label carrying revised MRP of Rs 19, which will reach markets in a week.

Vijay Sardana, the chairman of Assocham consumer affairs council, said: “These products with old MRP will be consumed in the next fortnight and by that time, products with revised MRP, which are already in the distribution channel, would have reached the market.”

The associations suggested that producers could get posters/pamphlets carrying details of the products with reduced MRP.

The same can be widely circulated and hung in retail shops for the consumer’s benefit so that they don’t end up paying more for the goods whose prices have come down.

“The penalty and jail term clause has created a confusion and many retailers have stopped ordering more products,” said Sardana.

BN Dixit, the director of legal metrology department that governs rules of weight measurement of manufactured goods, refused to divulge details of the meeting.

However, he said feedback received from the associations would be forwarded to the finance ministry.