GST impact: Consumer goods cos to petition govt against MRP sticker rules

Business Standard By Arnab Dutta & Viveat Susan Pinto July 7, 2017, 08:30 IST

Changing the maximum retail price tag may mean violation of norms

Consumer goods companies are likely to petition the government against the latest directive on affixing stickers to reflect the change in pricing under the goods and services tax (GST).

Persons in the know told Business Standard that legal teams of the Confederation of Indian Industry (CII) and the Federation of Indian Chambers of Commerce and Industry (FICCI) were studying implications of the order before making representations to the government. Companies producing consumer goods, handsets and appliances are worried affixing stickers may pit them against the metrology department of the government, which monitors the maximum retail price (MRP). The Legal Metrology Act, 2009, prohibits manufacturers from changing MRP tags once goods are out of the factory.

The government notification, aimed at stocks lying with companies and distributors, requires companies to advertise in two newspapers about the old and new MRP, besides putting stickers on packages to reflect the change.

“While a notification by the consumer affairs department says companies are to put stickers to reflect the change in pricing following the GST, we risk harassment from inspectors of the metrology department,” said the chief executive of a consumer goods company.

A Hindustan Unilever (HUL) spokesperson said the company would not avail of the relaxation provided by the government to affix stickers on unsold stocks. The company’s goods with new prices were beginning to be available in the market and more such changes would follow, the spokesperson said. Dabur India’s chief financial officer Lalit Malik said his company was evaluating the directive. “We will take appropriate action,” he added.

Bejon Mishra, an expert on consumer affairs, said the central government could, for a specific period, bypass the rule on not changing the MRP, but states would have to issue similar notifications. “This is a tedious, complicated and time-consuming affair,” he said.

Coming unstuck

  • The government’s notification of getting companies to affix stickers on unsold inventory lying with them has failed to cut ice
  • The reason for this is the notification goes against the Legal Metrology Act, 2009, which prevents companies from tinkering with price
  • Companies are likely to petition the government shortly on the matter
  • Industry bodies CII ands FICCI are studying implications of the order carefully before making representations to the government

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