Kirit Somaiya targets eateries for not passing on lower GST rates to customers, names McDonald’s, Starbucks; shoots off letter to FM Arun Jaitley

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New Delhi | Updated: November 17, 2017 8:02:48 AM

Lok Sabha MP Kirit Somaiya on Monday filed a complaint against some restaurants which are allegedly overcharging customers by flouting GST norms.

gst, mcdonalds, starbucks, TATA starbucks, restaurant bills, kirit somaiyya, kirit somaiya, kirit somaiya, gst restaurant billSubmitted proof of MacDonald & Starbucks @BJP4India (sic)” Somaiya said in a tweet.

Lok Sabha MP Kirit Somaiya on Monday filed a complaint against some restaurants which are allegedly overcharging customers by flouting GST norms. Somaiya met Finance Ministry and Consumer Ministry officials and requested Centre to take action against such restaurants. He also submitted ‘proofs’ against McDonald’s and Starbucks. “Met Senior Officials at Delhi of Finance Ministry & Consumer Ministry requested GOI to ask/take action against Restaurants not passing on benefits of GST reduction of 18% to 5% to Consumers. Submitted proof of MacDonald & Starbucks @BJP4India (sic)” Somaiya said in a tweet.

In his letter addressed to Finance Minister Arun Jaitley, Somaiya said that there are several restaurants who are indulging in malpractices. “Up to 14.11.17 they (restaurants) are charging 18/12% GST on the food bill of Rs. 100 now they have increased the prices of the items yesterday i.e. on 15.11.17 and added 5% GST, ultimately the customer is compelled to pay Rs.118 (or Rs.112) as he was paying upto 14.11.17,” Somaiya’s letter read. “I am enclosing herewith copies of two bills of restaurants of Mumbai where the net amount is same upto 14.11.17 and on 15.11.17,” he added. Somaiya added that one can observe that the restaurants have manipulated the prices/increased the MRP of the food items and once again rendered the total bill amount same. He further requested the ministry to check and take appropriate steps “so that the ultimate benefit of reduction of GST may be passed on to the customers.”

“Like many businesses operating in India, Tata Starbucks adjusted prices following the recent revision of the Goods and Services Tax (GST) structure. Ensuring savings for our customers on every product has been the priority for Starbucks during this process. The GST revision included the elimination of the input tax credit, increasing costs for the industry. As a result, we raised our base prices, while still providing savings for our customers after tax. Tata Starbucks strongly believes in conducting its business ethically and complies with all the local laws and regulations in all the communities where we do business and we apologize for the short notice on the changes,” Tata Starbucks spokesperson said told FE Online.

“Pricing is continually evaluated on a product-by-product basis in our stores to balance business needs while continuing to provide value to our customers. We are continuously looking for opportunities to provide meaningful value to our customers through benefits such as the My Starbucks Rewards program and unique in-store experiences,” the spokesperson said.

Meanwhile, McDonald’s has issued a clarification on the ongoing controversy. “The Government has brought down GST from 18% to 5%, but there has been a removal of Input Tax Credit. Due to this, our operating costs have gone up,” they said in a clarification. A note from McDonald’s said that the company believes in giving ‘the best value to our customers’ and have passed on the benefits wherever possible. “We have substantially reduced the prices of some of our flagship products including Big Spicy Chicken Wrap, Big Spicy Paneer Wrap, Chicken Maharaja Mac, Veg Maharaja Mac.” The company further said that it has always been open about prices.

Earlier, McDonald’s had allegedly raised the menu prices on at least some of its food products after the government reduced the GST rate from 18% to 5%. A Twitter user pointed out to the alleged discrepancy and posted an image of food bill with 18% GST and one with the same items at 5% GST. Both the images showed that the final price was same in both the cases as the restaurant charged a higher amount of the base price itself.

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