SC quashes Rs47-cr tax evasion notice against Flipkart

The Kerala High Court on Tuesday quashed the notice of a Rs47-crore fine slapped on e-commerce company Flipkart for evading Value Added Taxes.

Issuing the order, Justice A K Jayasankaran Nambiar said a perusal of the notices issued to the company showed they ''proceeded to draw definite conclusions as regards to the commission of an offence by the assessee'' rather than ''stating the reasons that prompted the revenue authorities to suspect an evasion of tax and calling for the explanation of the assessee to those reasons''.

There is no indication in the notice as to why the revenue authorities considered the petitioner as a dealer or why the transactions in question had to be treated as local sales as against inter-state sales.

WS Eetail, the seller responsible for effecting majority of the sales to the customers in Kerala through the online portal of the petitioner, is registered as a dealer under the Kerala Value Added Tax Act. It had also not concealed any taxable turnover under the Act, the court said.

Flipkart had contended that it did not sell goods to customers and was only providing an online market platform for its customers to buy goods.

The sellers of various goods would sell their products directly to buyers, it said.

The court, which quashed the notices, observed that the findings in the orders issued by the authorities reflected a patent non-application of mind and also smacked of arbitrariness.

The intelligence officers of the department should refer the case to the assessing officers of the department concerned for finalising the liability of tax before taking recourse to the penal provisions of the Act.