Relief For Flipkart: Kerala High Court Quashes $7 Mn Penalty On Flipkart

The Kerala High Court has revoked two legal notices issued against Bangalore-based ecommerce marketplace Flipkart. The HC had asked the company to pay penalty of over $7 Mn (INR 47 Cr) for allegedly evading VAT.

The company challenged the High Court notice and said, “It is the sellers who should pay the Value Added Tax (VAT)/ Central Sales Tax (CST), as applicable. We do not own the goods, but act as mere facilitators between the buyer and the seller. There was no sale of goods in order to be liable under the Kerala VAT Act – 2003 or the CST Act.”

Flipkart is a marketplace that provides an online market platform for customers to buy goods from listed sellers. The company does not sell goods to customers directly.

However, after reviewing the petition the HC said, “Intelligence officers of the Tax Department should refer the case to the assessing officers concerned for finalising the tax liability, before taking recourse to the penal provisions of the Act. The assessing officers can then proceed as per provisions of the Act to determine the tax liability of the dealer concerned.”

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