GST avoidance by e-commerce players causing huge loss of GST revenue to both state & central Govt and also urged support for E-Commerce Rules under the Consumer Protection Act.
The industrial body CAIT’s National President B.C.Bhartia and Secretary General Praveen Khandelwal in a joint statement demanded states to direct their respective GST departments to carry out a “substantial investigation” towards the selling pattern of e-commerce companies and for subsequent action. Selling goods below the prevailing market price “is causing regular huge loss of GST revenue to state governments and central government.
CAIT has written to Chief Ministers of all states highlighting the issue of “GST avoidance” by e-commerce companies, demanding an investigation. CAIT has alleged that the companies use artificial methods to reduce prices of goods on their platforms. They charge GST on artificial prices, causing huge GST revenue loss to state governments and central government, it added.
It further says, several foreign funded major global e-commerce companies are holding different kind of “Sales Festivals” round the year. During such sales unbelievable discounts are offered which reduces the prices to a great extent in comparison to prevailing market price.
These foreign funded companies, under FDI in e commerce policy, are authorized to do only Business to Business (B2B) activities are conducting whereas they are conducting Business to Consumers (B2C) sales activities right under the eyes and nose of the Government.
The letter says, we invite your attention towards the sales of large number of commodities particularly on the portals of these foreign funded companies where the sales price of commodity purchased is lower than the prevailing market price and the Government is entitled to accrue GST on the prevailing market price.
However, these companies by adopting predatory pricing and loss funding methods and in an artificial manner brings down the prices of the commodities quite low and charge GST on the artificial sales price directly causing a huge GST revenue loss to both State Governments and Central Government.
During the period of ” festival sales” of these e commerce companies, the goods are being sold at a much lesser price than the actual price by offering deep discounts from lo% to 8o% which is nothing but a predatory pricing and the GST which is supposed to be charged on the actual market price of the commodity in normal case is now being charged on the price after deducting the discounts offered and this is nothing but underpricing of the commodity by these e commerce portals thereby causing huge loss of GST revenue to the Government. Likewise, proportionally if goods are rightly valued, it could earn substantial Income Tax as well to the Government.
