Just dessert: Eatery collects Rs 26.18 as GST, consumer panel directs it to pay up Rs 12,000 as compensation

CHENNAI: A Chennai-based food outlet, which collected Goods and Services Tax (GST) without establishing its authority to do so, was guilty of unfair trade practice and deficiency in service, held the District Consumer Disputes Redressal Commission, Chennai (North), while directing it to pay Rs 12,000, including in legal fee to the customer.

The commission passed the order on a complaint filed by T Gowtham against Perambur-based food outlet Smoky Curve. According to the complainant, he purchased three food items for Rs 550, which included Rs 26.18 collected as GST. He alleged that the invoice did not contain a valid GST registration number and added that the GST number subsequently provided by the outlet was found, upon verification through the GST portal, to belong to a hardware business and not the food establishment.

The complainant contended that despite seeking clarification and a refund of the GST amount, the outlet failed to provide a satisfactory explanation. He argued that the tax had been collected without legal authority and sought compensation and litigation costs.

In its defence, the outlet denied the allegations and maintained that any omission in the invoice was due to a technical or software-related issue. It also claimed that the GST number referred to by the complainant belonged to another business run by the proprietor and had no connection with the food outlet.

After examining the records, the commission observed that the burden rested on the establishment to prove that it possessed a valid GST registration authorising it to collect tax from consumers. It noted that the outlet failed to produce any GST registration certificate, tax returns, or statutory records supporting its claim.

Holding that the collection of GST without furnishing valid registration details amounted to an unfair trade practice, the commission directed the outlet to pay Rs 10,000 as compensation, inclusive of the GST amount collected, and Rs 2,000 towards litigation costs. It also ordered the outlet to issue invoices containing all mandatory particulars prescribed under consumer protection rules.