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Tax authorities probing Raymond's consumer care business sale to Godrej: GST in focus

The Directorate General of GST Intelligence (DGGI) is investigating the sale of Raymond's consumer goods business to a Godrej unit, The Economic Times reported quoting sources.

In April 2023, Godrej Consumer Products (GCPL) acquired Raymond's FMCG business, including the Park Avenue, KS, KamaSutra, and Premium trademarks, through a slump sale. In a filing with the stock exchanges, GCPL revealed that it paid ₹2,825 crore for this acquisition.

Investigations Ongoing

Authorities have raised questions about whether goods and services tax (GST) should be applied to the transaction amount, and have requested Raymond Consumer Care (RCCL) to provide an explanation, the report added. They have also sought an explanation from GCPL regarding this transaction, it said.

As part of its investigation, the DGGI's Mumbai unit conducted an inspection of premises associated with Raymond, the report added. This action is based on Section 67 of the Central GST (CGST) Act, which empowers officials to conduct inspections if they suspect that relevant information has been withheld to evade tax.

Tax authorities believe that the Raymond-Godrej deal should be subject to 18 percent GST. They are currently reviewing the documents provided and the explanations given by the involved parties.

Company View

A spokesperson for Raymond told the paper that the DGGI inspection was “in respect of the specified transaction and not a search".

“We have provided a suitable explanation along with documentary evidence to support the claim that the sale of the business to GCPL, on a going concern basis, does not attract GST," the company said.

The statement added that both parties “sought an independent tax expert's opinion to confirm that no GST applies since it was a slump sale of the business on a going concern basis".

In FY22, RCCL reported sales of ₹522 crore. The company is a significant player in the men's deodorants category, ranking among the top five, and is the third-largest player in the branded condom segment. However, it holds a smaller market share in the mainstream soaps and shampoo segment.

Source: We have copied it from Live Mint for Academic/informational purpose.



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