CAIT requests FM to initiate probe into alleged tax avoidance by Amazon, Flipkart

CAIT requests FM to initiate probe into alleged tax avoidance by Amazon, Flipkart
Photo Credit: Reuters
25 Nov, 2019

The Confederation of All India Traders (CAIT) has appealed to Finance Minister Nirmala Sitharaman to look into the business model of e commerce companies, including Amazon and Flipkart.

The traders’ body has alleged that ecommerce companies are following unethical business practices like deep discounting, predatory pricing, violation of foreign direct investment norms and tax evasion.

In its letter to the FM, the body accused the etailers of selling products below the fair market value. This, it says, is both a disregard of the provisions of FDI policy of the Union Government and causes enormous loss of goods and service tax revenue and Income Tax to the Government.

“It is to bring to your kind notice that both Amazon & Flipkart has designed their business model based on highly predatory pricing and deep discounting and charging GST on artificially lowered price although as per GST law, they cannot undervalue the price of any commodity and under a statutory obligation to charge GST on actual market value,” CAIT said in the letter.

The letter also said that the concept of GST at the selling price does not hold good in such kind of supplies where the fundamentals of fair market value is not observed.

"Since FDI is governed by the FEMA & Reserve Bank of India, it is demanded that an another enquiry may also be initiated on pattern of receivable funding and its disbursement," CAIT added.

Last week, CAIT held a nationwide protest against etailers.

The body had earlier filed a writ petition at the Rajasthan High Court against the two ecommerce companies citing the violation of FDI rules.

The court asked Enforcement Directorate to complete an ongoing investigation into allegations of FEMA (Foreign Exchange Management Act) violations by the companies.