GST Taken From Online Shoppers Not Returned After Tax Rate Cut By E-Commerce Sites
The National Anti-Profiteering Authority(NAA) has demanded an audit of major e-commerce websites like Flipkart, Amazon, Myntra and Snapdeal to find out if they have refunded the excess GST that had been collected from the customers or not. The move comes after NAA had received a number of complaints about various e-commerce sites for not passing on the benefits of GST tax rate cuts to the buyers after the GST Council in November 2017 had lowered tax for over 220 items.
The Flipkart Case
The problem arose because when customers placed the order for certain products online, the GST rate was higher, however, the GST rates had been slashed till the time the items were delivered to them. According to Financial Express, Flipkart, while responding to a particular case, told NAA that there were 7,254 cases in where customers are to receive the refund amount after GST rate cut. In its response, it also mentioned that refunds to the customers have been initiated upon direction from the sellers.
The directives of National Anti-Profiteering Authority
After freeing Flipkart from charges of profiteering, NAA directed the Central Board of Indirect Taxes (CBIC) to audit major e-commerce platforms and subsequently submit its findings to NAA. According to media reports, the authority in its Flipkart ruling said, “conscious of the fact that there may be several such cases in which the e-platforms had collected excess GST from buyers and have not refunded the same after the tax was reduced on various products on November 15, 2017.”
As per the norms of the NAA, if the authority finds out that a company has not passed on GST benefits to the customer, it directs them to do so and in case of failure, the authority has the power to cancel the registrations of any entity or business.
According to Economic Times, other businesses to receive notices from the authority were Jubilant FoodWorks (Domino’s Pizza), Hardcastle Restaurants (McDonald’s), retailer Lifestyle International and auto firm Honda Motor.
What is GST?
GST or Goods and Services Tax is a new system of indirect taxation in India which brought many individual taxes under the ambit of one single tax, on July 1, 2017. The GST is governed by the GST Council and its Chairman is Finance Minister Arun Jaitley. The government had categorised 1211 items under four tax slabs, 5% 12%,18% and 28%.
However, on November 15, 2017, The GST Council had slashed tax rates on a host of household products such as chocolates, toothpaste, shampoo, washing powder and shaving creams to 18% from 28%. In its latest meeting, the Council slashed tax rates of more products or exempted them from the ambit of GST altogether.