Dabur in Controversy: Gets Rs 321 crore GST notice in India, US subsidiaries face lawsuits on allegations that hair relaxer products cause cancer
Indian multinational consumer goods company, Dabur India Ltd met with twin controversies in both India and abroad, as it has received a GST Rs 321 crore notice in India, and on the other hand, its subsidiaries has been subjected to series of lawsuits in U.S. and Canada by the consumers over the allegations that hair relaxer products cause had caused ovarian cancer, uterine cancer and other health issues.
In India, Dabur received a notice from the Government regarding the payment of GST short paid / not paid amounting to Rs. 3,20,60,53,069/- along with applicable interest and penalty.
"The Company has received intimation of tax ascertained as being payable under Section 74(5) of CGST Act, 2017, wherein GST short paid / notpaid amounting to Rs. 3,20,60,53,069/- has been advised to be paid by the Company along with the amount of applicable interest and penalty under Section 74(5) of COST Act, 2017, failing which Show Cause Notice will be issued," the Company has informed in a BSE filing.
Certain consumers in the hair relaxer product industry have alleged that some industry players/defendants sold and/or manufactured hair relaxer products that contain certain chemicals and that the use of the hair relaxer product has caused ovarian cancer, uterine cancer and other health issues.
"Cases have been filed in both federal and state courts in the United States and Canada. The federal cases were consolidated as a Multi-District Litigation, also referred to as MDL, before the United States District Court for the Northern District of Illinois," the Company informed.
Currently, there are approximately 5,400 cases in the MDL, which named Namaste, Dermoviva and DINTL as defendants, along with certain other industry players.
The cases are in the pleadings and early discovery phases of litigation, which means the parties are challenging the adequacy of the plaintiffs' complaints and, in some cases, exchanging requests for information and documents. There are various motions pending as well.
"At this stage of the litigation, any financial implication due to settlement or verdict outcome cannot be determined," it added. However, the company said defence costs for the litigation are expected to breach the materiality threshold in the near future.
Currently, cases are in the pleadings and early discovery phases of litigation. "There are various motions pending as well. Since we are in the initial stage of litigation, any final quantum of claim amount is neither probable nor estimable," it said.
