Directorate General of GST Intelligence (DGGI) has launched action against several fast-moving consumer goods (FMCG) players for alleged tax evasion.
According to a CNBC-TV18 report, DGGI sent notices and investigation intimation letters to FMCG companies, including TC, Pepsico, Prataap Snacks, Balaji Wafers, Guiltfree Industries Ltd and Sarveshwar Foods Ltd among others regarding this.
These companies are accused of paying lower rate of GST on "products coming under the head of — extruded snacks and fried pellet snacks," CNBC-TV18 quoted sources as saying.
Extrusion is a commonly used manufacturing process in the food industry that involves forcing a material to flow through a shaped hole (die) to make it ready to eat.
In 2023, the finance ministry came out with a circular saying food items prepared through the process of extrusion should attract 18 per cent GST and not 12 per cent.
"In the 48th meeting of the GST Council, it was clarified that the snack pellets (such as ‘fryums’), which are manufactured through the process of extrusion, are appropriately classifiable under tariff item 1905 90 30, which covers goods with description ‘Extruded or expanded products, savoury or salted’, and thereby attract GST at the rate of 18% vide S. No. 16 of Schedule-III of notification no. 1/2017-Central Tax (Rate), dated the 28th June, 2017," the notification had read.
The alleged GST evasion by the FMCG players resulted in significant revenue losses, according to DGCI.
"The DGGI has alleged ₹500 crore GST evasion by ITC Ltd, ₹300 crore by Prataap Snacks Ltd., ₹175.89 crore by PepsiCo India...," sources have been quoted as saying.
An ITC spokesperson reportedly said they are not able to comment on the issue as industry-wide enquiries are ongoing.
