National Anti-Profiteering Authority (NAA), the quasi-judicial body under the Goods and Services Tax (GST) system, has given relief to Flipkart from charges of profiteering.
A Chennai-based buyer (Ravi Gupta) had filed a complaint against the e-commerce company, who had bought an almirah, and was issued two invoices for the purchase by the supplier (Godrej Boyce Mfg. Co. Ltd.)–one (Rs 14,852) at the time of purchase and one (Rs 14,152) at the time of delivery. Both invoices showed different amounts and the buyer paid the higher amount. In his complaint against supplier as we as well e-commerce company, the buyer said that the excess amount of Rs 700 should have been refunded to him, and by not refunding him the differential amount, Flipkart is resorting to profiteering “which amounted to the contravention of the provision of Section 171 of the CGST Act 2017.
In its notice, NAA states that the supplier had levied a lower GST of 18% instead of 28% and thus there is no case of profiteering and no violation of CGST Act 2017 (Order copy here). The order said that the supplier had not changed the base price of the item which was prevalent at the time of booking and at the time of delivery. “The allegation of profiteering made by the applicant against the respondent as well as the supplier is not established and hence the application is not maintainable and the same is accordingly dismissed,” the NAA order said.
The standing committee also procured details from Flipkart on how many such cases were there in which at the time of booking of the orders on the e-commerce platform the rate of GST was higher than the rate of GST at the time of delivery of the goods and whether the company has a system of refund in place to refund the excess amount of tax collected by them (Flipkart).
In its letter, Flipkart responded that the excess amount of Rs 700 was refunded to the buyer. It also stated that it offers marketplace which enables the sellers to offer their products for direct sale to the customer for which it was charging commission and the sellers are entirely responsible for the supply of goods and services and for the payment of taxes.
Flipkart has a total of 7254 cases in which the rate of GST at the time of booking of the orders on its marketplace was higher than the rate of GST prevalent at the time of delivery. The e-commerce player also stated that it has initiated the process of refund of the differential amount as per the instructions of the sellers.