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Flipkart, Amazon Under GST Scanner For Excess Tax Collection

Flipkart, Amazon Under GST Scanner For Excess Tax Collection

The director general of audit of the CBIC will audit all major online retail companies

Flipkart has already received a clean chit from the matter

Government set up GST anti-profiteering authority last year

With the rate fluctuations of GST (Goods and Services Tax) raising concerns among masses, the GST Anti-Profiteering Authority has ordered an audit of major ecommerce companies, including Flipkart and Amazon India. The exercise aims to examine whether the online retail companies have refunded the excess GST collected from the consumers.

The anti-profiteering authority has “directed the Director General of Audit, CBIC, to audit the major online platforms and submit findings to the authority”.

The development comes in line with the change in rates by GST Council on over 200 items of daily use like chocolates, waffles, furniture, wrist watches, cutlery and ceramic tiles, with effect from 15 November 2017.

Last year, the government set up GST anti-profiteering authority to ensure consumers received the benefit of tax rate reductions after the rollout GST on July 1, 2017.

The order came in the light of a case against Flipkart wherein an individual had filed a complaint against Flipkart alleging profiteering as the GST rate was higher when orders were placed and lower by the time delivery was made to consumers.

In its ruling in the Flipkart case, the authority said it was “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.”

However, the authority dismissed the application against Flipkart after it was assured that the ecommerce company had initiated the process of refund of excess duty paid at the time of booking.

An email query sent to Flipkart and Amazon didn’t elicit any response till the time of publication.

Flipkart has been a long-term player with taxation issues with the councils but has been able to receive a clean chit many a time. Recently, it had settled the case of reclassifying discounts as capex.

Income Tax Appellate Tribunal (ITAT) rejected the revenue department’s argument that discounts rolled out by Flipkart should be reclassified as capital expenditure.

At the same time, a group of brick and mortar retailers including Future group and Reliance Retail and ICA have alleged that ecommerce companies like Flipkart and Amazon India are violating the FDI rules by “influencing prices on their platforms and illegally funding abnormal discounts”.

The government is mulling over an ecommerce policy with Union Minister Suresh Prabhu heading the meeting of the ecommerce think tank. As the ecommerce companies handle legal and taxation troubles, ecommerce policy remains much awaited for protection of companies, sellers and buyers.

[The development was reported by Livemint.]