The Directorate General of GST Intelligence (DGGI) is probing a recent deal in which Raymond sold its consumer goods business to a Godrej unit, sources aware of the matter told ET. The sources cited said the GST authorities have asked Raymond Consumer Care Ltd (RCCL) to explain why GST should not be levied on the transaction amount. GCPL acquired the FMCG business, along with the Park Avenue, KS, KamaSutra and Premium trademarks, through a slump sale in April 2023. In a filing with the exchanges, Godrej Consumer Products Ltd, the acquirer, said it had paid ₹2,825 crore.
The DGGI is also understood to have sought an explanation from GCPL on the matter. The sources cited added that DGGI’s Mumbai unit also conducted an inspection on premises linked to Raymond as part of its investigation. Section 67 of the CGST empowers an official to conduct an inspection if he has reason to believe that a person concerned has suppressed information to evade tax.
In an email reply to a query sent by ET, a Raymond spokesperson said, “… 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 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.” GCPL did not respond to an email till the time of going to press Sunday.
The department is of the view that the deal attracts GST payable at 18%. “Certain documents have been handed over by the company and the explanation is being studied,” said a person aware of the ongoing probe.
Earlier this year, Godrej Consumer Products Ltd had signed an agreement to acquire Raymond’s Consumer Care business, which includes men’s grooming brand Park Avenue, sexual wellness brand Kamasutra and deodorant KS Spark, the diversified group announced on Thursday.
ET was the first to report in its April 27 edition that GCPL was in advanced talks to acquire Raymond’s consumer care business.
Raymond Group operates in the FMCG industry through its associate company Raymond Consumer Care Limited (RCCL), under which the personal care, sexual wellness and home care were integrated in FY19-20. The integration brought about business synergies, operational efficiencies, and channel distribution strengths with premium brands like Park Avenue, KamaSutra, KS and Premium.
Raymond’s Consumer Care business reported sales of Rs 522 crore in financial year 2022. With sales of Rs 522 crore in FY 21-22, Raymond is one of the top five players in the men’s deodorants category, third largest in branded condom segment, but is a fringe player in mainstream soaps and shampoo market.
Source: Economic Times