Online service providers like 'Flipkart' facilitating sale and purchase of goods through online portals cannot be considered as dealer of goods - Not liable for VAT
PrintListen to this Article
Online service providers like 'Flipkart' facilitating sale and purchase of goods through online portals cannot be considered as dealer of goods - Not liable for VAT
Flipkart Internet (P.) Ltd. Vs. State of Kerala [(2015) 62 taxmann.com 387 (Kerala)]
Flipkart Internet (P.) Ltd. (“the Petitioner”) is an online service provider, registered under the Finance Act, 1994 facilitating transactions of sale and purchase through its online portal. After a customer identifies a product of his choice online, the seller of the particular product is notified of the choice of the customer and the Petitioner, in turn, raises an invoice on the customer and makes arrangements for the delivery of the product to the customer.
Further, depending on the nature of the sale transaction, whether intra-state or inter-state, the seller of the product pays sales tax either under the local VAT Act or under the CST Act, and the fact of payment of sales tax is indicated in the invoice issued to the customer.
An order of penalty was passed against the Petitioner by the authorities under Section 67 of the Kerala VAT Act on the finding that the Petitioner had breached the provisions of Sections 20 and 40 of the Kerala VAT Act in not getting itself registered as a dealer thereunder and further, for not filing returns and maintaining true and correct accounts as mandated under the Kerala VAT Act.
The Hon’ble High Court held that:
- The Department had imposed penalty without considering the contention of the Petitioner and the facts of the case that these sales transactions were effected by sellers who were registered on online portal of 'Flipkart' and all sales were inter-State sales, on which tax had been paid by seller under the CST Act.
- The contention of Department that the online portal could be seen as an intangible shop was legally flawed because it is well settled that the situs of a sale is wholly irrelevant to a determination of the issue of whether a sale is inter-State sale or not.
- The Department had imposed penalty on 'Flipkart' due to non-filing of returns and due to its failure to maintain true and correct accounts. However, there was no indication in notice as to why the 'Flipkart' was to be considered as a dealer and why said transaction was to be treated as local sales against inter-State sales.
- The Department has proceeded against the Petitioner without first having ascertained whether these transactions would come under the coverage of Kerala VAT Act. The matter must be first referred to the concerned Assessing Officers before invoking penal provisions since no tax can be levied except by authority of law.
Thus, the Hon’ble High Court set aside penalty by holding that ‘Flipkart’ is merely facilitating sales, purchase and delivery of goods, it can’t be considered as dealer of goods under Kerala VAT Act.
Category : VAT | Comments : 0 | Hits : 586
Introduction Regular audits are essential to ensure compliance and transparency in taxation. The new VAT Audit Form — 704 has brought out many major changes that are important for companies operating under the Sales Tax Act. The Maharashtra Value Added Tax Rules introduced this complete form with the objective of reducing the audit procedure and improving the effectiveness of tax administration. In this article, we’ll go into detail about the new VAT Audit Form 704, includin...
Sri Lakshmi Textiles Vs. the Commissioner of Commercial Taxes and Others [2016 (1) TMI 329 - MADRAS HIGH COURT] Facts: Sri Lakshmi Textiles(“the Petitioner”) is a partnership firm engaged in the business of inner garments and textiles registered under Tamil Nadu Value Added Tax Act, 2006 (“TN Vat Act”). The Petitioner was regularly filing the VAT return and paying the VAT liability after adjusting the corresponding input tax credit. For the Assessment Year 2013-2014, th...
Now days for Trading goods online via. Flipkart , Amazon , Snapdeal , Shopclues etc. every dealer is required by such e commerce sites to obtain DVAT registration certificate so as to enroll themselves as dealer on such e commerce sites. In that case, If a person is willing to start new business then he shall apply for voluntary registration otherwise Mandatory registration. Let me tell you the difference between Mandatory & Voluntary registration Mandatory ...
A lot of queries comes to mind when one thinks about taking registration under Gujarat VAT and CST Laws. Some of the queries and their answers are published as follows for the benefits of the readers: What is VAT / CST / TIN / Sales Tax ? Answer: VAT means Value Added Tax On Sales. CST means Central Sales Tax. TIN means Tax Identification Number. And Sales Tax is Tax on Sales. In a Summarized way, in any State Law, two types of registrations are available. Fir...
Supply to high seas vessel is liable to VAT if any territorial nexus exist in the State Raj Shipping Vs. State of Maharashtra [2015 (62) taxmann.com 309 (Bombay)] In the instant case, Raj Shipping (“the Petitioner”) was engaged in "Bunker Supplies" which mainly consisted of supply of High Speed Diesel Oil (“HSD”) to various incoming and outgoing vessels within or beyond the port limits of Mumbai port. The Petitioner was not paying Sales tax on supply of HS...
Comments