PANAJI: Suspicions that restaurants were profiteering from the Goods and Services Tax (GST) have proven true with Commercial Tax Department discovering that the prices on menus had shown no significant change despite the GST rate being cut from 18% to 5%.
What has shocked authorities further is that many restaurants and eateries in the state continue to charge patrons the same prices that were charged under the VAT regime.
"Many people have increased rates after GST was cut to 5%. We understand that input credit tax is no longer permitted, but it cannot be a 13% increase," said a central GST official .
Reports and complaints from customers prompted the commercial tax department inspect eateries to see if the benefits of the GST rate cut was being passed on to the customer. The results were far from amusing.
"Mostly, we have found that there is no change in the rates. They are the same prices that were being charged under VAT," sources said. "Very few restaurants have changed menu rates. The prices have not changed very significantly."
Department officials have warned restaurants that they are under watch and that if the lowered GST rate did not lead to a drop in prices, then they would be reported to the state-level screening committee for anti-profiteering.
"We are still conducting inspections and I have asked for the report by December 11. If there is any certain case of gravity, it will be escalated to the state-level screening committee and if they find merit, the complaint will be passed on to the GST anti-profiteering authority," commissioner of commercial taxes Dipak Bandekar said.
Restaurant owners argue that withdrawal of the input tax credit facility had negated the cut in GST rates for eating joints. All restaurants with a turnover up to Rs 1 crore charge 5% GST but cannot claim credit for taxes paid on raw material purchases. "With no input credit, our operational costs have increased," a restaurant owner said.
Prior to the rollout of GST, restaurants would levy a value-added-tax (VAT) of 12.5% on soft beverages and food and a service tax of 5.6%. Under GST, a total tax of 5% is levied. Despite this, the price of dishes has not shown a significant drop or benefit for patrons.
What has shocked authorities further is that many restaurants and eateries in the state continue to charge patrons the same prices that were charged under the VAT regime.
"Many people have increased rates after GST was cut to 5%. We understand that input credit tax is no longer permitted, but it cannot be a 13% increase," said a central GST official .
Reports and complaints from customers prompted the commercial tax department inspect eateries to see if the benefits of the GST rate cut was being passed on to the customer. The results were far from amusing.
"Mostly, we have found that there is no change in the rates. They are the same prices that were being charged under VAT," sources said. "Very few restaurants have changed menu rates. The prices have not changed very significantly."
Department officials have warned restaurants that they are under watch and that if the lowered GST rate did not lead to a drop in prices, then they would be reported to the state-level screening committee for anti-profiteering.
"We are still conducting inspections and I have asked for the report by December 11. If there is any certain case of gravity, it will be escalated to the state-level screening committee and if they find merit, the complaint will be passed on to the GST anti-profiteering authority," commissioner of commercial taxes Dipak Bandekar said.
Restaurant owners argue that withdrawal of the input tax credit facility had negated the cut in GST rates for eating joints. All restaurants with a turnover up to Rs 1 crore charge 5% GST but cannot claim credit for taxes paid on raw material purchases. "With no input credit, our operational costs have increased," a restaurant owner said.
Prior to the rollout of GST, restaurants would levy a value-added-tax (VAT) of 12.5% on soft beverages and food and a service tax of 5.6%. Under GST, a total tax of 5% is levied. Despite this, the price of dishes has not shown a significant drop or benefit for patrons.
Get latest news & live updates on the go on your pc with News App. Download The Times of India news app for your device.
