The anti-profiteering body has held that US pharmaceutical company Abbott Healthcare did not pass on the benefits of the goods and services tax to customers after the new regime started in July 2017 and the rate was further reduced in November that year.
Abbott had instead increased the price of a cream after GST became effective, the National Anti-profiteering Authority (NAA) said in an order on its website on Tuesday, fining the company and a pharmacy 96.59 lakh for profiteering rom GST.
Although the order pertains to only one product, the NAA will now investigate all products sold by Abbott, as per the order.
“DGAP (Director General of Anti-Profiteering) is directed to further investigate the quantum of profiteering on all the products including the present product which respondent (Abbott) is supplying,” NAA said in the order.
“This situation is a difference of interpretation of the GST rules and we are looking at next steps,” an Abbott spokesperson said in response to ET’s queries on the matter.
Tax experts said the order is set to open a Pandora’s Box for the pharmaceutical sector. ET first reported on June 22 that the NAA had started started probing drug companies for not passing on the benefits of lower taxes under the GST regime to customers. They said even manufacturing companies and pharmacies will come under the investigator’s lens.