Flipkart appeals to HC against Uttarakhand's high taxation
Flipkart has taken Uttarakhand's decision to levy 10% entry tax on goods purchased from e-commerce firms, to the Uttarakhand High Court (HC). Flipkart contended that the state's decision to exact such a high entry tax was unfair and discriminatory. The case will be important as other e-commerce players may join in to support equality in taxation of online and offline goods.
Entry Tax is a tax imposed by the state governments in India. It is exacted on the flow of the goods from one state into another and is enforced by the recipient state to guard their tax base.
Uttarakhand imposed an entry tax of 10% to be levied on all e-commerce shopping done within the state of Uttrakhand (which will be eventually paid by the consumer.) As per this special tax rule, the courier firms will be defined as 'principal' in any e-commerce transaction and thus, the extra 10% would be exacted from them. Courier companies will charge the customers for delivery.
Internet and Mobile Association of India (IAMAI) vigorously protested against the regressive tax diktat, which they assumed to have been introduced to help local traders who are opposing e-commerce industry. IAMAI further said that the tax was discriminatory, as the tax was imposed based on the origin of the product and hence against the rules of the Indian constitution.
IAMAI includes members such as Microsoft, Google, Facebook, LinkedIn, as well as e-commerce firms like Flipkart, Snapdeal, ebay India and Amazon India.
In Karnataka, Amazon is in a battle with the state government over a tax issue for over 18 months. The issue pertains to Karnataka authorities asking the online retailers to "pay VAT on third-party goods stored in state warehouses even before customers order these products". The state asked Amazon to pay tax on behalf of the traders that it had been evading.
After Bihar, Assam and Uttarakhand imposed entry tax on goods coming in from another state (online), other states are looking to do the same. States like Gujarat, Madhya Pradesh and Rajasthan have discussed the tax in budget speeches. While the states are looking at it as means to increase revenue, the e-commerce companies are calling such tax 'unconstitutional'.