The National Anti-Profiteering Authority has fined Starbucks Rs 1.04 crore plus 18% interest for not passing on the benefit of a reduction in the goods and services tax rate from 18% to 5% to consumers between November 2017 and June 2018. Starbucks was also directed to reduce the prices of its products.
Tata Starbucks, a 50:50 joint venture between Tata Consumer Products and Starbucks Corporation that operates Starbucks Coffee outlets in India, indicated that it may challenge the ruling.
“It is evident from the narration of facts that the respondent denied benefit of rate reduction” to buyers in contravention of the Central GST Act and thus resorted to profiteering, NAA chairman BN Sharma said in an order dated October 28.
The NAA directed the coffee chain to deposit the amount profiteered within three months, although it did not impose any penalties, citing amendments to the Finance Act in January 2020 that barred the levy of penalty retrospectively.
“As a responsible business, Tata Starbucks will comply with the ruling. Tata Starbucks intends to explore our legal options on the basis of our belief that we have followed the law in accordance with the revision of the GST structure.” a Tata Starbucks spokesperson said in response to query from ET.