Bharat Bhushan
ET Report
jammu, Aug 7: The Government is contemplating to examine the sales tax (ST) evasion, if any, by Best Price, Bharti Walmart's first cash and carry wholesale shop in J&K, which has of late been a topic of discussion among the J&K businessmen for at least two wrong reasons: First, it is alleged to be the single largest source of ST evasion in the state for selling its products directly to consumers and second, its alleged illegal retail trade is resulting in the gradual death of retail business in the region.
Asked if Best Price can also do retail business as it has the wholesale licence only, Finance Minister Haseeb Drabu said though he was not aware of the matter, the Government would definitely examine it.
"I don't know about it but I assure you the Government will not allow ST evasion by any one. We will look into it thoroughly," he asserted.
Commercial Taxes Commissioner Zafar Ahmad Bhat said, "The department will look into the alleged reports of ST evasion by Best Price and in case it turns out to be true, we will not let it continue. We will plug all the loopholes."
In reply to a query, he said being a wholesaler, Best Price, under no circumstances, could do the retail business. "As it has only the wholesale licence, it cannot sell its products in retail," Bhat said.
He said he would depute an officer of Inspector rank of his department to verify the reports of ST evasion and retail business by the Best Price.
Set up at Paloura here in November 2011, Best Price is Bharti Walmart's first cash and carry mega shop in the state. It offers competitive wholesale and fair prices on a variety of commodities. It is termed as one-stop business-to-business store that meets day-to-day needs of kiryana dealers, restaurant owners, hoteliers, caterers, fruit and vegetable sellers, and offices and institutions. It offers to its customers a variety of products and items of daily use but these are to be necessarily sold by it in wholesale only.
As per the laid down norms, a trader would get only those items from the store in which he deals. For example, a kiryana dealer would get kiryana items only. "But this is not happening. In violation of the norms that it is to follow as a wholesaler, Best Price is also selling him the non-kiryana items on wholesale rates. The VAT evasion starts from here. For example, if he buys such items from the market where their rate will surely be higher than that of the Best Price, he would be paying more VAT on them. But on the Best Price purchases, he is paying lesser amount of VAT because of the lower price of items in the store," a businessman alleged.
"I fail to understand why a kiryana dealer or any other businessman also sell the items which do not belong to his trade. The Best Price card holder can purchase only those items from the store in which he deals but he has been found buying the items, which do not belong to his trade, and then selling them in the market without paying any VAT on them, again causing a loss of taxes to the Government," he added.
"The Best Price be lawfully barred from doing so. This is leading to the theft of VAT by traders and its unintentional evasion by the store," the trader alleged.
Chamber of Traders Federation (CTF) president Yashpal Gupta alleged that while Best Price had the licence of wholesale business only, it was doing retail business also.
He said he was greatly concerned over the manner in which the mega shop was running its wholesale business operations. "While it was set up with the sole purpose of offering competitive wholesale prices on a variety of commodities to retailers only, of late it has also been found selling its products in retail directly to consumers," he alleged.
"This is a wrong practice because it is not meant to do retail business in the state. Under rule, it can only deal in wholesale business. How can it directly sell its products to the consumer, bypassing a retailer? This is against the basic Best Price business norms. We are not against its business dealings with retailers but we oppose tooth and nail its direct business link with the consumer as it leads to the VAT evasion by it. For example, when a wholesaler sells something to a retailer and retailer to consumer, the government gets VAT twice but when a wholesaler sells his commodity directly to the consumer, the Government will get VAT once only," Gupta said.
In reply to a query, he said, "How can a kiryana retailer buy a refrigerator from the mega store and then sell it in retail? This is an illegal practice and leads to tax evasion. To sell a refrigerator legally, he will have to add this article in the list of items already mentioned in his TIN No, failing which it would be seized by ST authorities at Lakhanpur, the J&K's entry point. However, while purchasing it from the Best Price and then selling it in retail, he skips this legal process, thereby causing a great loss to the state exchequer."
He alleged that many cards issued by Best Price to traders were fake. "Let these cards be cancelled and new cards be issued under the supervision of a Nodal Officer," the CTF president said.
He said, besides some firms, several in-service employees and other individuals were also the Best Price business card holders. Instead of going to the retail market in Jammu, they were making purchases from the Walmart Bharti's wholesale outlet.
Gupta also questioned the minimum shopping limit of Rs 1,000 as fixed by the Best price. "Let it be enhanced to Rs 10,000," he demanded.
"As the Best Price wholesale facility is at present easily available to in-service employees and others also, retailers in Jammu have been suffering a lot. Let it be a sale outlet for retailers only," he demanded. |
