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Ban or monitor Amazon & Flipkart’s festive sales, they cause tax loss — traders’ body to FM

In a letter to FM Sitharaman, CAIT accuses Amazon & Flipkart of engaging in predatory pricing during festive sales, causing loss of GST and income tax to the government.

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New Delhi: The Confederation of All India Traders (CAIT), a body that represents around seven crore traders across the country, has written to Finance Minister Nirmala Sitharaman seeking either a ban on seasonal sales offered by e-commerce giants Amazon and Flipkart over tax loss, or an eye on the sales.

In the letter dated 7 October, CAIT national general secretary Praveen Khandelwal accused Amazon and Flipkart of engaging in predatory pricing during festive sales, “causing huge loss of GST revenue” and income tax to the government.

The letter came even as reports emerged that the Competition Commission of India (CCI) has moved the Supreme Court to appeal an interim stay on its probe against Amazon and Flipkart ordered by the Karnataka High Court. The regulator was probing a complaint by CAIT and Delhi Vyapar Mahasangh over allegations of deep discounts and other unfair practices.

The CAIT letter to the finance minister repeated similar allegations.

Asked about allegations of predatory pricing during festival sales causing GST revenue loss to the government, an Amazon spokesperson said, “Sellers decide pricing. Our focus is to enable over 6.5 lakh sellers reach millions of customers across India We work closely with partners, lenders and financial institutions to help our customers afford more and save big.”

ThePrint reached Flipkart for a comment via email but there was no response until the time of publishing this report.


Also read: Amazon’s Diwali sale to last a month this year as it seeks to outdo Flipkart, JioMart


Ban or form task force

In the letter, the traders’ body said Amazon’s sale slated to begin 17 October, and Flipkart’s sale from 16 October “are in utter violation of FDI Policy of the Government”.

The letter alleged that these entities are authorised only to do business with other businesses (business to business) sales but are selling directly to end consumer (business to consumer), which is a “blatant violation of FDI Policy” even as the government has taken no action.

During these festival sales, large quantities of products are sold on such e-commerce platforms “by offering deep discounts from 10% to 80% which is nothing but a predatory pricing”, the letter said.

Due to the low pricing, the GST that should have been incurred on the actual price of the product also falls, it said.

“It’s 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 loser 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,” added the body.

The CAIT urged that the government should either ban these festive sales or appoint a ‘Special Task Force’ to monitor them and “get the difference of GST or other taxes which ought to be levied on the original value”.

However, it added that the body is not against e-commerce business and doesn’t fear competition, but wants a level-playing field.


Also read: Reliance Jio’s e-commerce entry is part of India’s changing market capture by ‘new retail’


 

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