IRS is looking into Raymond's sale of his consumer care company to Godrej; the emphasis is on GST

 IRS is looking into Raymond's sale of his consumer care company to Godrej; the emphasis is on GST

The sale of Raymond's consumer products company to a Godrej affiliate is being looked into by the Directorate General of GST Intelligence (DGGI), according to sources cited by The Economic Times.

Through a slump sale, Godrej Consumer Products (GCPL) purchased Raymond's FMCG company in April 2023, along with the Park Avenue, KS, KamaSutra, and Premium trademarks.

For this transaction, GCPL said that it paid ₹2,825 crore in a filing with the stock markets.

According to the article, ongoing investigations authorities have expressed doubts over the appropriateness of applying goods and services tax (GST) to the transaction amount and have asked Raymond Consumer Care (RCCL) for offering an explanation. It said that they have also asked GCPL for an explanation on this transaction.

The report also said that the Mumbai section of the DGGI examined Raymond's connected properties as part of its inquiry. The Central GST (CGST) Act's Section 67, which authorizes inspectors to undertake inspections if they believe pertinent information has been omitted to escape tax, serves as the legal basis for this action.

Tax officials think that 18% GST ought to apply to the Raymond-Godrej agreement. They are now going over the submitted papers and the justifications from the relevant parties.

Business Perspective

The DGGI examination was "in respect of the specified transaction and not a search," a representative for Raymond told the newspaper.

"We have furnished a fitting justification and substantiated the assertion that the going concern sale of the enterprise to GCPL is exempt from GST," the firm said.

According to the statement, the two sides "sought an independent tax expert's judgment to confirm that no GST applies since it was a continuing operations slump sale of the business."

GCPL has not answered questions.

RCCL had revenues of ₹522 crore during FY22. The firm has the third-largest position in the branded condom market and is a prominent participant in the men's deodorants sector, placing it among the top five. In the mainstream soap and shampoo sector, nevertheless, its market share is lower.