Dec 2, 2016
E-tailers lose tax battle in high court
Dec 2, 2016
Gujarat high court on Thursday dismissed petitions filed by global e-commerce giant Amazon Sellers Services Pvt Ltd, Flipkart Internet Pvt Ltd and Instakart questioning the state government’s law levying entry tax on goods sold in Gujarat through online shopping, according to a Times of Indian report.
A bench of Justice M R Shah and Justice B N Karia has upheld the imposition of entry tax on sale of goods through online platforms. However, the court has said that the companies would later get refund of the amount, which is paid towards such tax in other concerned states by them on the same product.
The litigations began in April after the state government made amendments in Gujarat Tax on Entry of Specified Goods into Local Areas Act, 2001 on March 31. The government came up with a notification for implementation of changed rules the next day.
The state government claimed that entry tax has been levied in the state budget in 2016-17 on top e-tailers to prove a level playing field to local dealers, who were being hurt by the competition. E-tailers are paying an entry tax on the difference in Value Added Tax (VAT) rates between Gujarat and the state from where the product is supplied.
These firms had claimed that they are not engaged in any sale of goods to customers, but they are mere service providers – online platforms for the sellers and buyers. The goods are directly purchased by buyers from sellers and the websites also make it amply clear that the goods are for end users and not for resale.
The taxes are paid by the sellers in respective states under VAT or Central Sales Tax Laws (CST). Since such e-tailers have nothing to do with the goods, there is no question of paying any tax. The HC, however, rejected their pleas and said that the taxes paid in other states could be refunded to the companies.
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