The All India Chemists and Distributors Federation (AICDF) has urged GST Council and National Anti-Profiteering Authority (NAA) to take action against the manufacturers of Ayurveda products and cosmetics for overcharging consumers despite reduction in GST rates from 12% to 5% and 28% to 18%.

It appealed to them not to target traders who have nothing to do with fixing/revising maximum retail prices (MRPs) of the products.

GST Council had reduced GST rates of almost 177 products at a meeting held in Guwahati, Assam on November 10, 2017. Of which, unbranded ayurvedic medicine rates have been slashed from 12% to 5% and rates of diabetic food, medicinal grade oxygen, skincare products and certain cosmetic products used as essential medicines mostly at the derma, gynae segments have decreased from 28% to 18% with a directive to get implemented immediately.

Surprisingly and significantly the common people are least benefited out of this rate cut but the industry is taking all undue advantages.

The manufacturers and their respective CFAs instead of reducing the MRP of the products post GST rate cut, have reshuffled the price to wholesaler and price to retailer immediately keeping the traders’ margin as it is. They have neither changed MRP of their products nor they have amended anything in their supplementary price lists so far provided to their dealers abiding the provision stated at paragraph 24 & 25 of Drugs (Prices Control) Order 2013, said Joydeep Sarkar, general secretary, AICDF in a letter to chairman of GST Council and chairman of NAA.

This implies that the manufacturers are not ready to decrease proportionately any paisa but this difference is only getting included with their regular profit since the dealers are experiencing with higher selling rate with the modified stage, he said.

The government has approved the constitution of a National Anti-Profiteering Authority (NAA) – the institutional mechanism under the GST law to check the unfair profit-making activities by the trading community.

AICDF has strongly condemned the part where the traders have been targeted exclusively for all apprehended misconducts and misappropriations in lieu of overcharging of prices and taxes.

The trade body says “We are the ‘commission agent’ and are bound to abide the prices/rates determined by the manufacturer or producer of the brands. In drug trade, a wholesaler and a retailer have a fixed trade margin of 10% and 20% respectively which has a specific calculation to determine excluding the tax/GST amount. If any dealer will overcharge still it has least effect on the consumer but only within the traders’ community.”

A consumer pays on MRP of the brands or formulations while the manufacturer is the sole and exclusive authority to determine/amend/modify the MRP following the respective regimes of different departmental guidelines, it added.

Sarkar said, “we have recently observed a section of manufacturers reshuffled the prices of unbranded ayurvedic products and cosmetic items keeping no change in their MRP. In fact it implies rise in both the wholesale prices and retail prices of the product with appreciation in the existing profit margin of the respective manufacturers who are selling them at the proportionate higher rate which they have deducted on account of GST. For e.g. no change in MRP has been observed in Ayurveda products of Himalaya Drug Company of Makali, Bangaluru post GST rate cut”.

“We have noticed similar anomalies with cosmetic products where the GST has been reduced by 10% (previously 28%) after the recent amendment. No changes have been observed while dealing similar products (Cosmetic Products) of Zydus Healthcare Limited, Dabur India Limited etc”, he said.

Despite stipulations defined at paragraph 24 & 25 of Drugs (Prices Control) Order 2013, these manufacturers are very much reluctant to abide the stringent provisions of providing supplementary price lists to their dealers which is a type of affidavit before initiating any sale of those brands.

Taking serious note of this, AICDF appealed to NAA to prosecute against such complaints by convicting the offenders with immediate effect for establishing consecutive precedent to others.