Tata Starbucks fined Rs 1.04 crore for not passing benefit of GST to consumers

The coffee chain increased the price of its 'short cappuccino' from Rs 155 to Rs 170, an increase of more than 11.79% and then charged 5% GST

Coffee-chain Tata Starbucks has been fined Rs 1.04 crore and an additional interest of 18% for not passing the benefit of reduction in goods and services tax rate from 18% to 5% to consumers.

The National Anti-Profiteering Authority levied the fine based on an investigation for the period between November 2017 and June 2018. This was after a consumer alleged that the company did not reduce its prices after GST was slashed from 18 to 5 per cent for restaurants in November 2017, according to multiple media reports.

According to the complaint, the coffee chain increased the price of its 'short cappuccino' from Rs 155 to Rs 170, an increase of more than 11.79%, which was the permissible limit, and then charged 5% GST over it.

The case dates to 2019 when the GST investigative arm found Tata Starbucks guilty of profiteering to the tune of Rs 4.51 crore by not reducing prices of coffee despite a cut in GST and referred it to the National Anti-Profiteering Authority to investigate and charge the quantum of profiteering.

The NAA in its recent order asked Starbucks to slash its prices, "so that the benefits of tax reduction are passed on to the recipients."

Tata Starbucks, a 50:50 joint venture between Tata Consumer Products Ltd and Starbucks Corporation which operates 200 stores in India across 13 cities, indicated that it may challenge the ruling.

"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," the company spokesperson was quoted as saying by The Economic Times.

(With inputs from agencies)