Hindustan Unilever faces Rs 447.5 crore GST demands and penalties

Leading fast-moving consumer goods (FMCG) manufacturer, Hindustan Unilever Ltd. (HUL), disclosed on Monday, 1 January 2024, that it has been served with Goods and Services Tax (GST) demands and penalties totaling Rs. 447.5 crores by the authorities. The regulatory filing stated that these orders are subject to appeal, and the company is in the process of evaluating them.

HUL, renowned for brands like Lux, Lifebuoy, Surf Excel, Rin, Pond’s, and Dove, received a total of five orders from various GST officials in different zones. The issues raised in these orders include the disallowance of GST credit and concerns related to salaries, including allowances paid to expatriates. The orders were issued on Friday, 29 December 2023, and Saturday, 31 December 2023, with HUL formally acknowledging them on the first working day of the New Year.

The demands include a significant amount of Rs. 372.82 crore for tax on salaries, including allowances paid to expatriates, along with a penalty of Rs. 39.90 crore, issued by the Joint Commissioner, CGST, and Central Excise, Mumbai East. Furthermore, the Deputy Commissioner of Commercial Tax Officer, Bengaluru, demanded tax on excess GST credit of Rs. 8.90 crore, along with a penalty of Rs. 89.08 lakh.

In a separate demand order, the Excise and Taxation Officer, Sonipat, Rohtak, Haryana, disallowed GST credit amounting to Rs. 12.94 crore and imposed a penalty of Rs 1.29 crore. Similarly, the Additional Commissioner, Central Tax and Central Excise, Kochi Commissionerate, disallowed GST credit and turnover adjustment of Rs 8.65 crore and imposed a penalty of Rs. 87.50 lakh.

HUL assured that these GST demands and penalties would not have any material impact on its financials or operations. The company emphasized that it is within its right to appeal these orders and will assess the situation before deciding on the course of action.

For the financial year ending on 31 March 2023, HUL reported a revenue of Rs. 59,144 crore. The company remains confident in its ability to navigate these challenges while maintaining its operational efficiency and financial stability.