Starbucks India, ITC, Patanjali Cheated Customers By Not Passing GST Benefits Up to Rs 176 Crore

Ever since the Goods and Service Tax has been implemented in India, there is at least one incident every week where we get to know about how people are finding out new ways of cheating the GST.

Be it a small scale restaurant, the coffee chain giant, Starbucks, or the FMCG chain Patanjali, there is no exception to this.

Why are businesses cheating with customers? How will Govt handle this consumer rights violation and GST theft?

Tata Starbucks Profiteering up to Rs. 4.51

Recently, the GST Council announced that the GST taxes will be cut down in a massive amount, with effect from January 1, 2019, which was extremely happy news for the citizens of India.

However, customers were not aware of the fraudulent ways of the organizations, which helped Starbucks profiteer an amount as high as Rs. 4.51 crore.

For restaurants, the rate of GST was cut down to 5% without the benefit of credit, which was previously 18% with input tax credit (ITC). After this rate cut, which obviously affected the coffee chain’s business, Tata Starbucks increased the basic pricing of one of its coffee variants.

This way, the price of the coffee did not change even after the huge cut down in GST but ensured that Starbucks did not face any losses. The whole fraud was brought into light with the help of an investigation by the Directorate General of Anti Profiteering (DGAP).

Tata Starbucks has responded to this saying, “As a responsible organization, Tata Starbucks conducts its business ethically and complies with all the local laws and regulations.”

ITC, Patanjali, and Others Under Investigation

On one hand, there is the government trying to reduce the GST rates with the intention of helping the common man of India, and then there are such organizations who blatantly refuse to pass on the benefits of rate cuts to customers, whereas this decision was not theirs to make in the first place.

In November 2017, the government cut the GST rates from 28% to 18% on a wide range of FMCG products, like shampoos, detergents, and others. However, firms like Baba Ramdev led Patanjali, and ITC did not pass on the benefits of the rate cuts on their products to the customers.

As per reports, Patanjali has benefitted of about Rs. 176 crore through these wrongdoings.

Both the companies are under the investigation led by the DGAP. Along with these, Procter & Gamble (P&G), Johnson & Johnson (J&J), and Samsung are some other companies who have also gone down the same path.