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CAIT urged for ‘substantial investigation’ to all CMs on avoidance of GST by E-commerce firms

Confederation Of All India Traders (CAIT) India has issued an important statement on Sunday to all Chief Ministers of Indian States, raising their concern about e-commerce companies’ GST avoidance, which is hurting both the state and the central government a huge amount of money, and requesting support for E-Commerce Rules under the Consumer Protection Act.

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CAIT also requested their support in pressuring the central government to introduce the draft e-commerce guidelines “so that the country’s current e-commerce landscape is liberated from the monopolistic cobweb of major e-commerce players, both foreign-funded and indigenous e-commerce entities.” The association had previously criticized Amazon and Flipkart for engaging in unethical business activities.

Furthermore, a majority of foreign leading multinational e-commerce giants host various types of “Sales Festivals” throughout the year. During these sales, remarkable discounts are offered, lowering costs significantly in comparison to market retail prices. These foreign-funded corporations are allowed to operate solely Business to Business (B2B) operations under the FDI in e-commerce guidelines, but they are also doing Business to Consumer (B2C) sales activities straightforwardly underneath the government’s nose.

Throughout the timeframe of “festival sales” hosted by e-commerce giants the items that are sold at quite a lower price than the original cost by providing heavy discounts ranging from 10 percent to 80 percent, which is nothing more than a monopolistic approach, and the Goods and Services Tax (GST), which is intended to be billed on the actual market price of the product in standard circumstances, is now being billed on the price after deducting the discount offered. Similarly, if commodities are fairly priced, the government may be able to collect a considerable amount of income tax.

In a joint statement, CAIT’s National President B.C.Bhartia and Secretary General Praveen Khandelwal appealed to states to order their respective GST authorities to conduct a “substantial investigation” into e-commerce companies’ pricing structures and take appropriate measures.

In June of this year, the government introduced revisions to the proposed e-commerce rules and requested feedback from the industry. Among the revisions made to the proposed rules by the Department of Consumer Affairs were a restriction on flash sales by e-commerce companies, mandated registration of such entities with the Department for Promotion of Industry and Internal Trade, and so forth. All e-commerce companies operating in India should also employ a chief compliance officer, a nodal contact person for 24-hour communication with law enforcement authorities, and a resident grievance officer, similar to the new IT Rules 2021.

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