Traders’ body to all Chief Ministers: ‘Considerable avoidance’ of GST by e-commerce firms, need probe

CAIT also urged for states' support to impress upon the central government to immediately implement the draft e-commerce rules

Ease of Doing Business for MSMEs: Traders’ body Confederation of All India Traders (CAIT) in a communication sent on Sunday to Chief Ministers of all states highlighted the issue of “considerable avoidance” of the goods and services tax (GST) GST by “big e-commerce companies by artificially reducing the prices of the goods sold at their e-commerce platform which is much lower than the actual market price of the goods.” CAIT also urged for their support to impress upon the central government to immediately implement the draft e-commerce rules “so that the current e-commerce landscape of the country is liberated from the monopolistic cobweb of major e-commerce players both foreign funded and indigenous e-commerce entities.” The association had levelling allegations against Amazon and Flipkart for undertaking unethical business practices such as deep discounting, flouting FDI rules, preference to select sellers, etc.

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…These foreign funded companies, under FDI in e-commerce policy, are authorized to do only Business to Business (B2B) activities whereas they are conducting Business to Consumers (B2C) sales activities right under the eyes and nose of the Government in complete violation of the policy of the government,” they added.

The government in June this year had made amendments to the draft e-commerce policy and sought suggestions from the industry. The Department of Consumer Affairs had suggested a ban on flash sales by e-commerce entities, mandatory registration of such entities with the Department for Promotion of Industry and Internal Trade, etc., among the changes made to the draft policy. It also suggested the appointment of a chief compliance officer, a nodal contact person for 24×7 coordination with law enforcement agencies and a resident grievance officer by e-commerce companies.

“In a case where a mobile’s actual sale price is Rs 10,000 rupees, the government is entitled to get GST at Rs 10,000. However, on portals of these companies, the same mobile is sold at a much lower rate, say Rs 6,000 by adopting predatory pricing and charging GST at Rs 6000 causing a huge GST revenue loss to both central and state governments,” Bhartia and Khandelwal said