Coca-Cola GST Notice Casts Uncertainty on FMCG, Auto & Consumer Discounts
Discounting practices adopted by fast moving consumer Good (FMCG), auto spares and consumer durable companies face uncertainty due to a goods and services tax (GST) notice sent to beverage maker Hindustan Coca-Cola Beverages.
Earlier this year, GST authorities sent a notice to Coca-Cola, demanding Rs 2,500 crore in unpaid taxes. Hindustan Coca-Cola Beverages is the Indian subsidiary of the US-based drinks giant.
GST authorities alleged that the distributors were giving discounts to suppliers after which Coca-Cola was compensating them.
Earlier this month, Coco-Cola moved the Bombay High Court seeking quashing of the notice. The court on April 1 stayed the proceedings and asked the tax department for replies.
The revenue department is of the view that Coca-Cola is undervaluing the supply by deducting discounts from the value and the discounts are extended to distributors for past sales. This amounts to GST evasion, the tax department has alleged.
