HUL Hit with Rs 447.5 Crore GST Demands and Penalties

In a significant development, leading FMCG maker Hindustan Unilever Ltd (HUL) announced on Monday that it has received Goods and Services Tax (GST) demands and penalties amounting to a substantial Rs 447.5 crore from the authorities. This news has garnered attention in the business and financial sectors.

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Multiple Orders Received

HUL, renowned for its iconic brands such as Lux, Lifebuoy, Surf Excel, Rin, Ponds, and Dove, disclosed that it has received a total of five orders from different zones of GST officials. These orders pertain to various issues, including the disallowance of GST credit and the inclusion of salaries and allowances paid to expatriates in the tax calculation.

Details of the Orders

The company received the orders on December 30 and 31, 2023, and promptly submitted the intimation on January 1, 2024, being the first working day after receiving the orders. The orders include a significant demand for tax on salaries and allowances paid to expatriates, amounting to Rs 372.82 crore, along with a penalty of Rs 39.90 crore imposed by the Joint Commissioner, CGST, and Central Excise, Mumbai East.

Additionally, the Deputy Commissioner of Commercial Tax Officer, Bengaluru, has issued a demand for tax on the grounds of excess GST credit availed, amounting to Rs 8.90 crore, accompanied by a penalty of Rs 89.08 lakh. Furthermore, the Excise and Taxation Officer, Sonipat, Rohtak, Haryana, has disallowed GST credit of Rs 12.94 crore and imposed a penalty of Rs 1.29 crore.

The Additional Commissioner, Central Tax, and Central Excise, Kochi Commissionerate, has also disallowed GST credit and turnover adjustment totaling Rs 8.65 crore, along with a penalty of Rs 87.50 lakh.

HUL's Response

HUL has responded to these GST demands and penalties by stating that they are currently appealable and that the company will conduct an assessment to exercise its right to appeal. The company emphasized that these orders are not expected to have a material impact on its financial position, operations, or other activities due to the intimation of tax payable.

Financial Performance

For the financial year that ended on March 31, 2023, HUL reported a revenue of Rs 59,144 crore, showcasing its strong market presence and financial performance.

The news of HUL receiving substantial GST demands and penalties has generated interest among stakeholders and industry experts. As the company evaluates its options and exercises its right to appeal, the outcome of this situation will be closely monitored in the coming days.