Flipkart appeals to HC against Uttarakhand for higher taxes on e-purchases

Flipkart said it is engaged with several stakeholders to urge the Uttarakhand government to revoke the additional tax

Flipkart has moved the Uttarakhand High Court (HC) against the 10 per cent entry tax in the state on goods purchased from e-commerce firms.  In a petition filed with the court in February, Flipkart argued that the state’s move to impose such a high entry tax was discriminatory. The case will be heard next week and could see other e-commerce players joining in to help maintain parity in taxation of goods bought online and offline.  

“The move by the Uttarakhand government of imposing 10 per cent additional tax will negatively impact hundreds of thousands of consumers in the state, who rely on e-commerce. This additional tax is on top of the tax already paid on such goods by the sellers in the state from where the goods have been dispatched,” said a company spokesperson. Maharashtra, Bihar and Karnataka, too, levy entry tax on e-commerce goods. A few other states are also planning to follow suit.

If Uttarakhand HC rules in favour of Flipkart, experts say it could deter other states from implementing such a tax as they, too, could be sued.

Flipkart has said it is engaged with several stakeholders to urge the Uttarakhand government to revoke the additional tax on e-commerce purchases. However, the company did not mention if it was working with rival firms such as Snapdeal and Amazon. Business Standard could not independently verify the same.

“It’s crazy that you can tax some transactions and not others. We can’t have a situation where we have 35 different taxation regimes depending on where you deliver a product. It is important for products to have a simplified taxation,” said Mahesh Murthy, co-founder of Seedfund, an early-stage venture capital firm.

Several states are targeting the boom in e-commerce, a sector which facilitated the sale of goods worth Rs 80,412 crore in 2015, to drive revenues. They argue that e-commerce transactions where purchases are done within the state but the delivery originates from outside the state are leading to a huge loss in revenues.

In Karnataka, one of the largest markets for goods bought online, global e-commerce giant Amazon is in a heated battle with the state government over a taxation issue that has been on for 18 months. The state had asked Amazon to pay up on behalf of the traders on its platform that evade taxes. The company shot down the proposal and discussions to resolve the issue are still on.