The coffee chain says that it "conducts its business ethically and complies with all the local laws and regulations".
Starbucks India may be penalised after not passing a Goods & Service Tax (GST) cuts to customers.
DNA India reports that a probe by India's Director General of Anti-Profiteering (DGAP) discovered the coffee chain "profiteered Rs 4-5 crore (US$564,000 to $705,000) as it did not passed on the benefit of GST rate cuts to its customers."
The case is reportedly being heard by the NAA for a final decision.
Tata Starbucks, a joint venture between the Seattle-based coffee store chain and Tata Global Beverages, operates Starbucks outlets across several cities such as Delhi, Mumbai and Bengaluru.
The investigation came after a customer complained to the anti-profiteering authorities that the coffee chain had not reduced the price of its product despite a reduction in the GST rate from 18% to 5%.
The GST Council deducted the tax rate on restaurants last November 2017. Under it, the businesses are obligated to compute and pass on the benefit of tax rate cuts to consumers when the government slashes the taxes on the goods and services.
In an emailed response to DNA India, a Tata Starbucks spokesperson said, "We cannot share confidential information as you requested, but can confirm Starbucks conducts its business ethically and complies with all the local laws and regulations."
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