A Single bench of Madras High Court held that the sale effected by the flipkart through their online portal is not assessable under the provisions of the Puducherry Value Added Tax Act.
Justice T.S Sivagnanam observed that, though the Company have an outlet registered under the provisions of the Puducherry VAT Act and consignments have been effected by using the TIN and Forms, the Company cannot be made liable to pay tax under the Act since the transactions constitutes “intestate purchases”, for which tax under CST Act is payable.
The Court was considering the question whether the retail sale of mobile phones, computer spare parts, personal healthcare products, car accessories, cameras etc., done by the petitioner via the online portal www.flipkart.com would qualify as an inter-state sale or a local sale within the union territory of Puducherry.
The petitioners M/s.WS Retail Services Private Limited opened a hub in Puducheri, which, according to the petitioners, acts as a sorting facility to sort the deliveries based on the area/street for delivery to the customers. The petitioners claimed that no tax is payable under PVAT Act sinceno sale or inventory holding transactions that are effected from the hub located in the Union Territory of Puducherry.
The Court, based on a catena of decisions, laid down the essential requisites which constitutes inter-state sale. According to the Court, when a consumer purchases goods from the online portal, the package containing the product purchased by the buyer is despatched to Puducherry to the outlet of the petitioner on “self basis”.When the consignments reach Puducherry, they are kept in a depot established by the petitioner, which is registered under the provisions of the PVAT Act, as only as a courier service, thereafter, the products are handed over to the buyers.
While rejecting the contentions of the Revenue, Justice T.S Sivagnanam pointed out that mere mention of TIN number by giving only the code of Puducherryas assigned by the Commercial Taxes Department that by itself will not be a ground to state that the petitioner has committed an offence.
The Court relied upon the decision of the Kerala High court in the case of Flipkart Internet and Ors., vs. State of Kerala, in which it was held that the petitioner is a registered dealer under the Kerala VAT Act and in the returns submitted by them, they had conceded’NIL’ taxable turnover under the Kerala VAT Act on the ground that the entire sales turnover pertained to the interstate sale effected by them.
Read the full text of the Judgment below.
