The Directorate General of GST Intelligence (DGGI) is currently investigating a recent transaction where Raymond transferred its consumer goods division to a unit under the Godrej Group. Informed sources have disclosed that GST authorities have contacted Raymond Consumer Care Ltd (RCCL) and requested an explanation regarding the potential imposition of GST on the transaction value. Godrej Consumer Products Ltd (GCPL) acquired the FMCG business, along with the Park Avenue, KS, KamaSutra, and Premium brand names, through a slump sale in April 2023. In a statement submitted to the stock exchanges, Godrej Consumer Products Ltd, the acquiring entity, reported a payment of INR 2,825 crore for this acquisition.
Raymond-Godrej FMCG Deal
The DGGI is reportedly seeking clarification from GCPL regarding this issue as well. According to the sources, the DGGI’s Mumbai unit carried out an inspection at locations associated with Raymond as part of its inquiry. Section 67 of the CGST grants authority to an official to conduct inspections if there are grounds to suspect that an individual has concealed information to avoid paying taxes.
In response to an inquiry sent via email, a Raymond representative explained, “… please note that it was an inspection by DGGI in respect of the specified transaction and not a search. Further, we have provided suitable explanation along with the documentary evidence to the effect that the sale of business to GCPL on going concern basis, does not attract GST. Given the contours of the deal and basis the independent tax expert opinion sought by both the parties, the said transaction does not attract any GST as it was a slump sale of the business on going concern basis.”
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As of the time of press, GCPL had not yet replied to an email.
The department maintains that the transaction is subject to an 18% GST obligation.
“Certain documents have been handed over by the company and the explanation is being studied,” said a person aware of the ongoing probe.