Mumbai: National Anti-Profiteering Authority (NAA) has recently passed an order against two Subway outlets at Mumbai international airport's Terminal 2. NAA checks profiteering activities under the goods and services tax (GST) laws. Profiteering refers to a seller's act of not passing on the benefits of a reduction in the tax rate to the end customers.
Lite Bite Travel Foods, an Andheri-based company, operated as many as 35 outlets, which included these two franchisee Subway outlets investigated by GST officials.
The NAA concurred with the investigation report that the amount profiteered was Rs. 61.7 lakh.
The NAA's order states the company will have to deposit the amount within three months in two equal parts with the Central Consumer Welfare Fund and the Maharashtra State Consumer Welfare Fund.
It will also have to bear 18% penal interest computed from the date of the sale of products till the profiteered amount was deposited.
In addition, as all 35 outlets had the same GST registration number and the same electronic ledger for input tax credit, the others will now be investigated to determine whether or not the benefit of a cut in GST rates was passed on to customers.
Post the reduction in GST rate from 18% to 5% with effect from November 15, 2017, several food outlets across the country have come under the scanner.
Determining profiteering is not easy, though, especially as the reduced rate also came with a restriction that no input tax credit would be available to the restaurants, say tax experts.
Director General of Anti-Profiteering (DGAP)'s investigation into these two outlets allegedly showed that the company had resorted to profiteering by various means. One was by increasing the base price of many of its products and maintaining the same selling price; the other was by way of not reducing the selling price for some other products, despite the cut in GST rates.
27/08/20 Times of India
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Lite Bite Travel Foods, an Andheri-based company, operated as many as 35 outlets, which included these two franchisee Subway outlets investigated by GST officials.
The NAA concurred with the investigation report that the amount profiteered was Rs. 61.7 lakh.
The NAA's order states the company will have to deposit the amount within three months in two equal parts with the Central Consumer Welfare Fund and the Maharashtra State Consumer Welfare Fund.
It will also have to bear 18% penal interest computed from the date of the sale of products till the profiteered amount was deposited.
In addition, as all 35 outlets had the same GST registration number and the same electronic ledger for input tax credit, the others will now be investigated to determine whether or not the benefit of a cut in GST rates was passed on to customers.
Post the reduction in GST rate from 18% to 5% with effect from November 15, 2017, several food outlets across the country have come under the scanner.
Determining profiteering is not easy, though, especially as the reduced rate also came with a restriction that no input tax credit would be available to the restaurants, say tax experts.
Director General of Anti-Profiteering (DGAP)'s investigation into these two outlets allegedly showed that the company had resorted to profiteering by various means. One was by increasing the base price of many of its products and maintaining the same selling price; the other was by way of not reducing the selling price for some other products, despite the cut in GST rates.
27/08/20 Times of India
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