Kullu: Hoarding, black marketeering of cigarettes unchecked after GST hike

A sharp increase in goods and services tax (GST) on cigarette has triggered an unexpected fallout in several markets in Kullu district: widespread hoarding and black marketeering, leaving consumers at the mercy of profiteers. In the weeks leading to the revised GST rates, cigarette stocks mysteriously began disappearing from shelves and many consumers alleged that supplies started drying up as early as mid-January when the tax hike became imminent.

Smokers in towns and cities claim that wholesalers and retailers deliberately withheld stocks in anticipation of higher prices. Now, despite the revised GST having come into effect, cigarettes are being sold at rates more than 20 per cent above the printed maximum retail price (MRP). In some areas, shopkeepers are openly charging arbitrary prices, citing “new rates” or “limited supply” as justification. Consumers allege that this unchecked practice amounts to outright extortion.

Ironically, market observers say that even after factoring in the new GST rates, the actual price increase of a cigarette pack may not be as steep as what buyers are at presenty being forced to pay on the black market. “The present selling price in many outlets exceeds what the official revised prices will be,” says a local trader, suggesting that profiteering, rather than taxation, is driving the price spike.

Several consumers argue that while smoking may be considered an unnecessary item by policymakers, for many it is a habitual necessity, especially in today’s stressful and demanding environment. “You cannot justify overcharging simply because the product is taxed more,” says an aggrieved customer. “If the government revises the GST, that is one thing but selling cigarettes above the MRP is illegal and unfair.”

Some traders say that the government should reconsider high import duties on cigarette. They argue that excessive taxation and import barriers distort the market and encourage hoarding. “If India wants to compete in global markets, the import duty on cigarette should be rationalised or even abolished,” opines a businessman. Taxation should not merely become a tool to mint revenue at the cost of market stability, he adds.

Meanwhile, consumer groups have called upon the authorities concerned to conduct inspections, ensure adequate supply and penalise offenders indulging in black marketeering. “Such extortions must be checked immediately,” says a consumer rights activist.