Published On : Fri, Jul 7th, 2017

Caught on Audio : Nagpur retailer admits to increasing price under GST garb

Nagpur: Picture this. A citizen named Shyam Bapat enters a famous sweets and restaurant outlet at Shankar Nagar square to buy a cake for his parents’ wedding anniversary. Earlier he used to pay Rs 350 for this cake but he was handed over the bill of Rs 417. At 18% GST levied on cake, the eatable that used to cost Rs 350 including previously applicable VAT is now being sold with extra levy of GST . “How come VAT is not reduced from the price before applying GST. This clearly means the big retailers are trying to make the windfall gains in the name of GST. And they are doing this by creating a big hole in customers pocket. Its an open loot in the name of tax revision”, laments Mr Bapat.

And this is not just an isolated case. Ever since Goods and Services Tax (GST) came into being, the traders, especially big retailers and FMCG companies like Britannia, PepsiCo, Parle, Dabur and Marico have decided not to go by government’s mandate of changing the price labels of the goods which were earlier sold inclusive of existing taxes like VAT, Service Tax etc. Most of the retailers are finding it cumbersome to go for price revision of unsold stocks. But this trend has given rise to the manipulation at local stores which do not have any such issue of relabeling.

Similar is the situation at all the restaurants and retail shops in Nagpur. A famous restaurant Gokul Vrindavan at Dharampeth who used to charge Rs 60 for a plate of sabudaana wada is now charging Rs 67 for the same. Still the question remains – Did the price not include any tax before GST? “I am sure they were applying VAT and service tax to this, but why did such retailers forget to subtract VAT and then apply GST.”

No check on such conduct
The officials of GST department may be visiting market to know whether benefit of reduction of taxes if any has been passed on to consumers or not but there is no check on this malpractice by big names in Nagpur. Nagpur Today tried to reach the officials concerned but they deliberately avoided the calls.

Shops defend their stand
When NT questioned about the price more than usually charged for the similar product, we were given different replies from different counters of same shop. One person told NT that they have increased their basic prices and hence the difference. Then another one replied that we have not updated the system to revise the basic prices (ie reducing VAT and other pre-existing taxes) before applying GST to it. The one came up with rather interesting reply that earlier we were not charging any VAT or any other tax on the retail price but now GST is being charged.”

Officials eyeing ‘something else’
B C Bhartia, National President, Confederation of all India traders, has led a delegation to Amit Saini Jt Commissioner of Sales Tax (Inv) to discuss the issues post GST implementation. In a press release, Bhartia said that it is widely claimed that after GST interaction between officials and traders will be minimised but GST was implemented from 1st July and officials started visiting markets from 4th July has been a matter of concern amongst the traders though the visit may be for consumer benefit.

Red chillies or capsicum?
Bhartia brought to the knowledge of Amit Saini the issue of taxing red chillies under name of capsicum. He said that capsium in local language is called Shimla Mirch. It is surprising that Shimla Mirch whether green, yellow or red is exempt but taking clue from capsicum as botanical name the dept was to tax Red chillies under disguise that it is member of capsicum family. This according to Bhartia is extending the wording beyond imagination. If this is accepted than traders will have to learn Botany as well as all engineering words to know what can bde taxed where. Chillies when green is tax free and when it changes colour it becomes taxable. The markets of Guntur and Nagpur are not ready to accept such illogical extention of meaning.

Contractors wary of GST
Raising the issue of NMC contractors association Bhartia said that in respect of those works order which were issued prior to 30th June carried VAT extra. Now vat is subsumed in GST. Since GST extra is not mentioned in the work order the contractors fear that department will not give GST. Contractors cannot pay taxes of around 18% from their pocket. Bhartia requested that some departmental instructions should be issued to allow charging GST in addition to amount.

B C Bhartia appraised Mr Amit Saini about running of GST ki Pathshala to develop skills is gst compliance amongst accountants and traders to make them gst tax compliant.

Caught on audio
A famous sweet shop owner in Nagpur has been caught on audio admitting that they have randomly increased the prices and also imposing GST as they were yet to see the impact. The owner also went on to blame journalist for highlighting their errors. Here’s the audio…