CA Bimal Jain
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:
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.