CAIT says e-commerce portals avoiding GST during festival sales; seeks probe

New Delhi: Traders body CAIT on Sunday alleged that e-commerce portals during the festive sales are causing huge loss of revenue to the government by levying GST on the discounted price rather than on the actual market price of the commodity.

The Confederation of All India Traders (CAIT) in a communication sent to Finance Minister Nirmala Sitharaman on Sunday charged that the e-commerce companies particularly Amazon and Flipkart through their festive sales are depriving the government with huge amount of GST revenue, a CAIT statement said.

CAIT has urged the Finance Minister to order an investigation into the business model of these companies.

"Its irony that if a trader makes even a slight mistake during the course of his business, he is subjected to several penalties and even prosecution. However, these e-commerce companies which are authorised to do only Business to Business (B2B) activities are conducting Business to Consumers (B2C) sales right under the eyes and nose of the government and no action has been taken so far against them for such a blatant violation of FDI Policy," it said.

CAIT National President B C Bhartia said during festive sales of e-commerce companies a large number of commodities are being sold at a much lesser price than the actual price thanks to deep discounts from 10 to 80 per cent which is nothing but a "predatory pricing".

Moreover, 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, he added.

Bhartia said that its an open fact that deep discounts offered by these e-commerce companies are funded by their investors and in actual terms they are not the losers, the ultimate looser is the government in shape of revenue which it ought to have received on actual market price but due to open manipulations of these e-commerce companies, the government is denied of its due revenue.

It is very astonishing that these companies are running into losses since last so many years but still they are continuing with their business operations and holding festival sales and other sales round the year from time to time, he added.

Bhartia clarified that traders are not against e-commerce business and have a firm view that e-commerce is future mode of business in the country. But there has to be a level-playing field where there should not be any element of predatory pricing or deep discounting.