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,\" Chidambaram told the court.
The Delhi high court has directed the Delhi government to investigate the charges regarding a complaint filed by two law students alleging that food aggregator Food Panda was levying an inflated Value Added Tax on unsuspecting customers using its services.
In his order, 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.
“The company had not received any notification about the Delhi High Court ordering a probe into alleged inflation of food bills by the company. There is no notification that we have received regarding this,” said Saurabh Kochhar, CEO, foodpanda India.
Final year law students Pranav Jain and Aroon Menon, through their representative, former union minister and senior lawyer P Chidambaram, had informed the court that having come across several cases of customers paying excess taxes applicable to eateries and online food portals, they had designed a website called http:www.kitnatax.com to help them calculate the exact amount payable for a meal in a restaurant or delivered to their doorsteps.
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."
Chidambaram, along with advocate Naman Joshi, told the court that his clients' findings were corroborated when on ordering food on two occasions from two different eateries via the website's app, they realised that the VAT on both the occasions had been wrongly worked out. Instead of calculating the tax as a percentage of the sub-total, it had been determined on an amount that included the sub-total and the service tax.
"The same is in clear violation of provisions of Delhi Value Added Tax Act 2004 and leads to a cascading effect," the petition explained, pointing out that a service element already taxed by the central government was being re-taxed by Food Panda.
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," Chidambaram told the court.
The students maintained that they had complained about the matter to Food Panda. But when their pleas elicited no response, they had decided to approach the court.
Speaking to TOI, Joshi claimed consumers are totally unaware of how much tax is payable on ordered food and it is likely that many diners end up paying inflated amounts.This practice, he said, is probably not restricted to Food Panda, which only happened to be the first entity to be found out.