Amazon key seller Cloudtail found guilty of profiteering

By: |
Published: March 8, 2019 5:31:40 AM

The indirect tax department’s audit division has been investigating scores of cases where major e-commerce operators like Amazon and Flipkart are suspected to have collected excess GST from their customers and failed to refund the taxes.

The National Anti-profiteering Authority has found the online seller Cloudtail– partly owned by Amazon Asia – guilty of profiteering.

The National Anti-profiteering Authority has found the online seller Cloudtail– partly owned by Amazon Asia – guilty of profiteering to the tune of Rs 10.8 lakh through sale of printer cartridges at a higher base price after Goods and Services Tax (GST) rates were reduced in November, 2017. This neutralised the benefit that should have accrued to consumers, the order said, and asked the company to deposit the profiteered amount to the consumer welfare fund with 18% interest.

During the hearing, Cloudtail said it was a retailer selling products manufactured by other vendors, and argued that it had no control over the maximum retail price (MRP) affixed by the manufacturer or importer.

Read | Lost your things in Uber ride? Here’s how to get it back

“In the present case, we are concerned with the supplier, which has increased the price even after reduction in GST tax rate. The passing of the benefit by the distributor or retailer does not rest on the fact that the manufacturer or his supplier should have passed on the same benefit to him first,” NAA said. Further, the order said that Cloudtail not only increased the base price but also charged GST on the increased base price.

After the government amended foreign direct investment guidelines in e-commerce that came into effect from February 1, NR Narayana Murthy’s Catamaran Ventures increased its stake in Cloudtail’s parent company Prione Business Services to 76% from 51% earlier. Following this arrangement, Amazon Asia’s stake in the joint venture has reduced to 24% from 49% previously and Cloudtail no longer falls under the ambit of Amazon’s group company.

Also read | Will small, midcap stocks rally continue? What experts say; check top bets

The indirect tax department’s audit division has been investigating scores of cases where major e-commerce operators like Amazon and Flipkart are suspected to have collected excess GST from their customers and failed to refund the taxes. The move followed a direction from NAA, which received a clutch of complaints about the e-commerce firms allegedly not passing on the benefit of tax rate cuts to the buyers, after the GST Council lowered the tax for over 220 items on November 15 last year.

In a particular case related to e-commerce company Flipkart last year, the company had informed NAA that there were 7,254 cases in which the GST rates, at the time of booking the orders on the platform, was higher than those prevalent at the time of delivery. In all these cases, the e-commerce firm said, it had initiated the refund process as per the instructions from the sellers.

Get live Stock Prices from BSE and NSE and latest NAV, portfolio of Mutual Funds, calculate your tax by Income Tax Calculator, know market’s Top Gainers, Top Losers & Best Equity Funds. Like us on Facebook and follow us on Twitter.

Switch to Hindi Edition