After a case issued by two law students against the food aggregator Food Panda, on charging an inflated Value Added Tax on orders processed through their website, the Delhi High Court has directed the Delhi government to investigate the charges.
Justice Rajiv Sahai Endlaw has given the Department of Trade and Taxes three weeks to act on the complaint, while telling it to keep the court abreast of probe results. The department was told to take action in three months if the allegations were found to be true.
Final year law students of National Law University Delhi, Pranav Jain and Aroon Menon, ordered from Foodpanda in September and discovered that the taxes charged were wrongly calculated leading to customer paying more than what is actually required as per law.
“We ordered food from Foodpanda’s app on two occasions from two different restaurants and realised that the VAT on both the orders had been wrongly worked out. While the order was only for Rs 105 the VAT was calculated on an amount that included the sub-total and the service tax(which was around Rs 5.6), instead of calculating the tax as a percentage of the sub-total,” Jain told Indiaretailing.
Jain and Menon had also designed a website in May this year known as kitnatax.com to help the consumers calculate the exact amount payable for a meal in a restaurant or delivered to their doorsteps. The website, which was initially only for Delhi consumers, is now applicable for Haryana, Karnataka and West Bengal.
“While the difference between the amount paid as tax and the amount actually payable was miniscule, such amounts become significant when there are tens of thousands of such transactions on a daily basis. Our website and app was also created to educate consumers about such wrongdoings,” Jain explained further.
The students had first complained about the matter to Food Panda and Department of Trade and Taxes. But when their pleas elicited no response, they decided to approach the court.
Former union minister and senior lawyer P Chidambaram along with advocate Naman Joshi is representing their case and has filed the petition in the Delhi High Court.
Their petition explained that “over the course of time and usage of the website and application (app), it was discovered that numerous customers of Food Panda website or app were being charged taxes that were wrongly calculated leading to customer paying more to FP than was actually required as per law”.