Tuesday 12 April 2016

Stay order on entry tax in West Bengal; Temporary relief for Flipkart

Entry tax is the latest trend in ecommerce. One by one Indian states are deciding to impose a tax on online goods crossing into their borders. The sudden inconsistent taxes in multiple locations like Rajasthan, Gujarat, Assam, Bihar, UP, Uttarakhand and other states, are outrageous and a burden in most etailers opinions.

A Titan in Court?

Flipkart has been bold enough to take on state specific taxes and its victories have encouraged them to keep fighting against unnecessary state taxes. After obtaining a stay order over the entry tax issue in Uttarakhand, from the state’s High Court, Flipkart sued the West Bengal Government, on similar grounds.
In this case against entry tax the homegrown marketplace received judgment in its favor, from the Calcutta High Court. Flipkart’s legal battle winning streak may have the necessary impact to put an end to entry tax on online goods in other states.

Flipkart’s Petition

A petition was filed by Instakart Services, which manages Flipkart’s logistics arm eKart. The petition was filed towards the end of March. According to the review of this petition by ET, the West Bengal government wants to levy 1% entry tax on the value of each consignment delivered by eKart into the state. Flipkart argued that:
  • This tax lacks ‘legal’ basis
  • It has increased the cost of goods and materials brought by them into West Bengal for either consumption or use
The state government mandated 1% entry tax as a requirement for generation of ‘waybills’ (a prerequisite for delivery of shipments. However, a court order dated April 5, has declared that the state cannot insist on the payment of this tax.
The order further said, as a consequence, the petitioner will be entitled to generate waybills in terms of the said rule without payment of entry tax of any kind.  Also if the programme or system must be changed for this purpose, the state of West Bengal must do so immediately, to avoid inconvenience to the petitioner in the electronic generation of waybills without payment for entry tax.

West Bengal Government will take matters higher up!

The state government claimed that matters of similar nature were taken to the Supreme Court and has applied to have the case sorted by the highest power in Indian judiciary.

Calcutta High Court judgment is for the greater good says Flipkart

The Calcutta High Court stay order will benefit the state’s consumers who were forced to pay additional taxes on online goods, said one of Flipkart’s spokespersons in an email response. The marketplace’s spokesperson also wrote, “Hearing on the petition filed by Flipkart, the court has put a stay on the collection of entry tax on the goods entering the state of West Bengal. The collection of entry tax was anticonsumer and was reducing the benefits of ecommerce for the residents of West Bengal.”
But, it’s not just consumer’s and West Bengal residents Flipkart is fighting for.Entry taxes are bad for ecommerce business, especially if you’re looking to make substantial profits, right?

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