Smt. Saroja convened the panel discussion and introduced the five panel members to the audience.
1. Mr. Rajkumar, Department of Legal Metrology - Chair
2. Mr. Dasarathi, Department of Legal Metrology
3. Mr. R. Srinivasan, Honorary Secretary, Tamil Nadu Hotels Association
4. Mr. Natarajan, Proprietor, Janaki Pharmacy, General Secretary, Chennai Chemists and Druggists Association
5. Mr. Thyagaraj S. Mannargudi, Managing Partner, Nilgiris Medavakkam
Each panel member then shared her/his professional experiences as regards how GST has influenced their professions after July 1, 2017.
1. Mr. Rajkumar, Deputy Controller, Department of Legal Metrology said that the panel members assembled there were very appropriate as they represented essential commodities - food, medicines and groceries/provisions retailers - that we need in our daily life. He said that water bottle pricing is a common issue encountered in hotels after the advent of GST. He said awareness in backward and rural areas may be far lesser than that of Chennai.
2. Mr. Dasarathi, Department of Legal Metrology started by saying that Legal Metrology was a central government department but it was enforced by each state. To tackle GST-related consumer issues, we must first see how consumers are viewing it and then only we can understand how we can protect consumers. Why consumers need protection is because there's a transaction involved where consumers can be defrauded. Previously, weighing and packing of commodities used to be done in front of the consumers, but today, several consumer goods are weighed and pre-packed. He explained that the Packaged Commodities Rules fall under the jurisdiction of his Legal Metrology Department. The “MRP - inclusive of all taxes” must be declared on the packaging itself and this is the absolute final price! Products must not be sold to consumers more than the MRP, he stressed.
He clarified about the notification from his department head office at New Delhi that even though it was the rule, before GST, MRP indicated in the product should not be changed at all. However, packages manufactured and lying unsold before July 1, 2017 were allowed to put a sticker for showing GST. He said that the original MRP must also be visible in addition to the GST sticker showing the revised price based on GST. The final price difference should not exceed the GST rate and the previous MRP specified. Anything charged more is exploitation, he said, and consumers can approach his department which has been handling such cases. He mentioned that packaged water manufacturers were frequently over-pricing their products. He said his motto was - prices charged must be exact - not more and not less. Next, he gave a few legal resources for consumers, namely;
- Consumer Affairs Department (Central Government Ministry)
- Legal Metrology under Labour Department website (State Government)
- LMCTS (Legal metrology Complaint Tracking System) App (download for easy filing and tracking complaints - esp. overpricing, MRP related complaints)
3. Mr. R. Srinivasan, Honorary Secretary, Tamil Nadu Hotels Association started by clarifying that he was opposing the GST council only and not against CBEC tax officers assembled there. He said that, in the hotel industry, Tamil Nadu, Kerala, Pondicherry, were most affected by GST. Earlier, tax, which was 0.5% - 2% under VAT, was now, 12% for non-AC and for AC it had gone up from 8% to 18%. He stressed that taxes alone have increased for hotel food - the prices of the food items themselves have not changed. For small hotels, tax has increased from 2% to 12% and 8% to 18%, but for starred hotels, tax has come down to 18% from 20.5%! He represented to the GST council to obtain consumer relief and said that hotels are tax collecting agents only. Service tax was levied to hotels firstly in 2011. Only restaurants serving liquor and with AC, levied Service Tax in 2011. Nextly, all AC restaurants levied Service Tax in 2013. Non-AC portions of restaurants were later exempted from service tax, but not yet done in GST regime. He is representing this on behalf of Non-AC consumers’ justice. He hoped that partly AC restaurants get some relief. He said that after GST, all members of his hotels association were instructed not to charge above MRP even for composite supply. Water will be charged separately, but again within the MRP rate strictly.
4. Mr. Natarajan, Proprietor, Janaki Pharmacy, General Secretary, Chennai Chemists and Druggists Association
He started by saying that his association welcomed GST. His association had no rights over pharmaceutical prices as it was centrally controlled. Medicines falling within 5% tax slab earlier, are now under the 12% slab. So they lost 7% in their holding stock value due to GST. Almost 80% of pharma products fall under the 12% tax slab. So, he requested some compensation from the GST officials. Unlike any other sector, pharma is the only industry that has products that fall under all five slabs. Anti-profiteering law has nothing to do with this industry. His bills had taxes listed clearly on them, state and central government taxes were clearly specified in their bills. He said that it is getting difficult to answer customers who feel that so far there were no taxes, but now GST has been added. He repeated that they are GST tax collection agents only and consumers had to pay the new GST taxes added now. Major pharma products should come under 5% GST rate so that both pharma traders and consumers benefit.
5. Mr. Thyagarajan, Managing Partner, Nilgiris, Medavakkam
He said that as a retailer, he welcomed GST and felt it is the best thing to have happened in independent India. He said that it is a big transition that needs time to settle and we all need to cooperate and adhere. He said that his was only an independent retailer's experience and not an association’s. For his 10,000+ inventory stock, MRP remained the same, but GST was added to it after June 30. He feels that GST transition was made at a wrong time during the peak season of school reopening. Customers who needed medicines that were not in the shop’s stock inventory then could not be served, as fresh stock from suppliers was unavailable as they were busy making the GST transition. Taking physical inventory for GST transition was a really stressful experience for them with small number of staff. He said that GST transition was a tough and challenging project for him despite decades of Information Technology experience.
From a consumer’s perspective, everyone has been hearing/reading about GST across the country. Media and government have done a great job to make all people aware. In his store bills, Harmonised System Number (HSN) code is displayed now. Ninety days grace period has been given to retailers to make the transition. Retailers are charging only MRP even after GST, so as far as consumer is concerned, there is no change and as for vegetables, there is no MRP. However, for small retail shops like his, reinvoicing and rebilling damaged products he receives from suppliers is difficult after GST. He requested representation for this issue. Now retailers have to pay up-front the hefty extra GST added in and claim the extra tax from government. After GST, a 5.1% difference in taxes is a direct loss for retailers - as manufacturers do not pay back these retailers. This has been big surprise from GST, as retailers’ interests were not fully considered. He ended by saying that he hopes GST brings merit to our country.
The panel discussion ended and the Questions and Answers Session began.
Q & A
1. Q: Has Entertainment tax for cinemas been reduced or not under GST?
A: (By Smt. Umashanthi): It has been subsumed under GST - and not specifically reduced just because of GST.
2. Q: Vegetables: How to distinguish between fresh and frozen vegetables, how are vegetables priced now?
A: (By Mr. Thyagaraj): Fresh vegetables are sold fresh and not refrigerated. Frozen vegetables are cut and frozen. All vegetables are being sold at MRP at his store, but MRP for vegetables varies across stores.
3. Q: What is UTGST?
A: (By Smt. Umashanti): UTGST is the name for GST levied within India’s Union Territories.
4. Q: The bills seem complicated now. How to find what GST was charged?
A: (By Smt. Umashanti and Smt. Saroja): After GST, state and central break-ups of the GST taxes will be shown on bills. If it is a product that has MRP, then the price is inclusive of GST. The audience are requested to go through bills with care.
5. Q: In railway catering items, price has increased, staff claim that it is because of GST. Who to represent this complaint to?
A: (By Smt. Umashanti) Please contact IRCTC.
6. Q: A customer went to a textiles retail showroom of M/S ColorPlus. He bought two trousers at Rs. 3600/- each, a 25% discount was given, and then 12% GST was charged after a discount. Can companies do this? Or are they using discount as a shelter under GST to charge consumers extra?
A1: (By Mr. Dasarathi, Legal Metrology): Check if bill shows "MRP inclusive of all taxes" are not. Then that is the final price. He said that retailers should give the correct declaration in their labels.
A2: (By Mr. Chakravarthy, Asst. Commissioner, GST): Garments are typically not a packed item. Some trousers are unpacked with labels on them and just a price listed on them. For these items, giving discounts and adding taxes on top are liable to be done. But, for fully packed items with MRP listed on them, it is not possible.
A3: (By Mr. Dasarathi): In short, the declaration "MRP inclusive of all taxes" is needed for all packed commodities. Say, if an item is listed at Rs. 1000/- label price and a 25% discount is given, it is to be taken that Rs. 1000/- MRP was inclusive of all taxes. This should be the final price after all taxes. If a 25% discount is given now by the shopkeeper, no more taxes can be charged after this. Mr. Dasarathi reiterated that if any products are charged over and above MRP, or if the product labels do not declare "MRP inclusive of all taxes", his department can be approached for remedy.
7. Q: (Comment/request by audience): GST must be reduced on all essential commodities such as sanitary napkins, vehicle servicing, ATM transaction fees, etc. This will help lower income people and rural communities. Consumers are already facing heavy tax burden. It does not seem that taxes have been reduced as claimed. For example, shops in the railway station are still charging excess for water bottles.
A: (By Mr. Dasarathi) He requested consumers to take the effort to lodge a complaint through the LMCTS App then see the results for themselves.
A:(By Smt. Umashanthi) Consumers must cooperate by paying taxes and not making a taxless purchase just to get items cheap.
8.Q: What are the credits available to retailers on goods kept on stock bought before GST rollout date?
A: (By Smt. Umashanthi and Mr. Chakravarthy) The “TRAN 1” document on the GST portal deals with transitioning issues. The audience is requested to read the GST website for more details.
Conclusion of the Seminar
Smt. Saroja summarized the proceedings of this seminar and gave a vote of thanks and mementos to the chief guest Mr. Rajeev Kumar, speakers - Mr. Chakravarty and Smt. Umashanthi (both from the GST Commissionerate) for giving detailed presentations about GST, five panel members for the lively discussions of GST-related issues found in society. She next thanked CAI, CAG team members, consumer groups, Ethiraj College students for their presentation and survey findings, the audience and the media for participating and making this event a success.
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