After two law students filed a complaint alleging that Foodpanda was levying extra VAT on customers, the Delhi High Court has instructed the Delhi government to investigate into the issue.
Justice Rajiv Sahai Endlaw ordered the Department of Trade and Taxes to look into the complaint within three weeks. The department was also instructed to take action in three months if the allegations were found to be true.
Foodpanda’s CEO Saurabh Kochhar told to ET that the company hadn’t received any notification regarding the Delhi High Court order.
Final year law students Pranav Jain and Aroon Menon told in court that they had come across several instances of customers paying excess taxes to eat eateries and online food portals aggregated by Foodpanda.
They also have designed a website called http:www.kitnatax.com to help calculate the exact amount payable for a meal in a restaurant or delivered to their doorsteps.
“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,” the petition said.
The petitioners’ representative told the court that his clients placed an order on two occasions from two different eateries via the website’s app— they discovered that the VAT price on both the instances were charged wrongly.
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.
A service element already being taxed by the central government was being re-taxed by Food Panda itself—this violates the Delhi Value Added Tax Act 2004, says the petition filed by the student lawyers.
The students said that they had complained to Food Panda about the issue, but never received a valid response from the team, forcing them to take legal action.