GSTAT Delhi Upholds ₹90.9 Lakh Profiteering Finding Against Wai Wai Noodles Maker

The Goods and Services Tax Appellate Tribunal at Delhi has ordered C.G. Foods, the maker of Wai Wai instant noodles, to deposit Rs. 90.9 lakh after holding that the benefit of a GST rate cut was not passed on to consumers.

The order was passed by a single-member bench of Anil Kumar Gupta, which agreed with the findings of the Director General of Anti-Profiteering that the company increased base prices even after the tax rate on instant noodles was reduced from 18% to 12% with effect from November 15, 2017.

The case concerned the pricing of instant noodles sold by the company, with the investigation specifically examining Wai Wai Chicken Noodles Mimi 35g. The records showed that after the tax cut took effect, prices charged at the invoice level did not come down as expected. In several instances, they went up.

Invoice data showed that while the commensurate post-tax price for Wai Wai Chicken Noodles Mimi 35g worked out to Rs 226.66 per carton, the actual price charged was Rs 237.57. The difference was treated as excess recovery from buyers.

C.G. Foods said it was facing sustained cost pressures. It pointed to higher prices of wheat flour, palm oil and spices, increased packaging costs, and higher freight expenses. It also said competition in the instant noodles market limited its pricing flexibility and stressed that the maximum retail price had not been increased during the period.

The tribunal was not persuaded. It found that most of the cost increases cited by the company related to periods prior to the GST rate cut and did not justify the increase in base prices after the reduction took effect.

“The respondent has failed to establish any cogent basis for increasing the base prices of the subject goods despite the reduction of GST rate from 18% to 12%.”

Upholding the anti-profiteering authority's calculation, the tribunal confirmed profiteering of Rs. 90,90,310 for the period from November 15, 2017, to December 31, 2018, and directed that the amount be deposited equally into the Consumer Welfare Funds of the Centre and the states.

The tribunal declined to impose interest or penalty, noting that the statutory provisions enabling such levy came into force after the period during which the violation was found to have occurred