Tamil Nadu cautions online dealers to pay taxes promptly or face action

Commercial Tax Department investigation reveals certain dealers in online trading indulged in tax evasion

At a time when the flash sales in e-commerce major Flipkart and discounting by various e-commerce sites has attracted attention of the public, traders and the Union government, the Government of Tamil Nadu has said that the recent investigations reveal that e-commerce dealers has evaded tax and cautioned the public to alert the government on any such activities.

The Commercial Taxes Department of the Government of Tamil Nadu said that recent investigations undertaken by the Department reveal that certain dealers involved in online trading have indulged in tax evasion by not declaring the turnover on online sales. Such dealers have not paid the Value Added Tax (VAT) due thereon to the Government on sales effected through e-commerce portals.

""Commercial Taxes Department is verifying bank transactions made on e-commerce portals for suppression of sales and legitimate tax due to Government and the tax recovered as per provisions of TNVAT Act 2006. Further such dealers evading tax are warned of prosecution under Section 71 of Tamil Nadu Value Added Tax Act, 2006," said a release issued by the Department.

In one such instance, a dealer has made sales online for several crores of rupees but reported a small portion of such turnover to the Government for which legal action is being pursued to collect tax due including interest and penalty, it said.

It further clarified that the Tamil Nadu VAT is payable on online purchase of any goods, including downloaded software, e-book, songs etc, by a consumer in Tamil Nadu from an online retailer delivering goods from Tamil Nadu. In case the online retailer delivers goods from Tamil Nadu to a consumer in another state, Central Sales Tax is payable and in case of sale of motor vehicles from within Tamil Nadu or outside the State to a consumer in Tamil Nadu, entry tax shall be paid by the online seller or importer of such vehicle into Tamil Nadu.

The Department cautioned dealers to disclose and pay the taxes on all transactions through e-commerce portals or face punitive action. It also requested the citizens to insist on tax invoices containing necessary details while effecting online purchases, which would enhance their consumer rights and to inform the Department about any violation of these rules.

It may be noted that the retailers across the country has came up with complaints against the flash sales and discounts offered by the e-commerce website and the e-commerce major Flipkart had to apologise for not adequately preparing to host a bumper discount sales event 'Big Billion Day' it held on Tuesday.