NAA finds McDonald's franchisee Hardcastle guilty of profiteering

Hardcastle Restaurants was operating quick service restaurants under the brand name McDonald's in the western and southern regions of India.

PTIUpdated: Sunday, December 13, 2020, 10:39 PM IST
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McDonald/ Representational Image | Pixabay

The National Anti-Profiteering Authority (NAA) has found Hardcastle Restaurants, a franchisee of fast food chain McDonald's, guilty of not passing on GST rate cut benefits of over Rs 7.49 crore to consumers.

Hardcastle Restaurants was operating quick service restaurants under the brand name McDonald's in the western and southern regions of India.

In its final order on the matter given on December 9, the NAA has held that Hardcastle Restaurants had resorted to profiteering by charging more price for some of its products even though GST on it reduced from 18 per cent of 5 per cent without input tax credit (ITC) with effect from November 15, 2017.

The NAA has also directed the restaurant to reduce prices of all impacted products commensurately in respect of which profiteering had been computed, keeping in view the reduced rate of tax and the benefit of ITC which has been availed.

It also directed Hardcastle to deposit 50 per cent of the profiteered amount of Rs 7.49 crore in the Central Consumer Welfare Fund and balance 50 per cent on consumer welfare funds of 10 states where supplies by Hardcastle resulted in profiteering. The deposits will also attract 18 per cent interest rate applicable from the date from which higher amount was realised by the respondent despite tax cuts and will have to be deposited within a period of three months.

NAA said that though the offence attracted penalty, the same would not be applicable in this case as the penalty provisions has been inserted into CGST Act, 2017 with effect from January 1, 2020 and was not in operation between November 15, 2017 and January 31, 2018 where the violation took place.

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