CST & VAT: Kerala VAT- ‘Flipkart’
is merely facilitating sales, purchase and delivery of goods, it can’t be
considered as dealer of goods under Kerala VAT Act.
Facts
a) ‘Flipkart’ (assessee), being an
online service provider facilitating sales or purchases, was registered under
service tax law. Notice was issued to ‘Flipkart’ under Kerala VAT Act (KVAT)
for neither registering as a dealer nor filing returns. Accordingly, penalty
was levied on it for such default.
b) Flipkart’ argued that it was only a
service provider which was not engaged in business of sale or purchase of
goods. It merely facilitated transactions of sale or purchase through its
online portal and made arrangements for the delivery of goods. Therefore, the
provisions of KVAT Act were not applicable to it.
The High Court held as under:
1) The tenor of notice gave ample
implication that the department had made up its mind to impose penalty on
assessee without any supported reasons. It did not consider the contentions of
assessee that the said transactions were inter-State sales. These sales
transactions were effected by sellers who were registered on online portal of
‘Flipkart’ and all sales were inter-State sales on which tax had been paid by
seller under the CST Act.
2) The contention of department that the
online portal could be seen as an intangible shop was legally flawed because it
is well settled that the situs of a sale is wholly irrelevant to a
determination of the issue of whether a sale is inter-State sale or not
3) The department had imposed penalty on
‘Flipkart’ due to non-filing of returns and due to its failure to maintain true
and correct accounts. However, there was no indication in notice as to why the
‘Flipkart’ was to be considered as a dealer and why said transaction was to be
treated as local sales against inter-State sales.
4) The department has proceeded against
the assessee without first having ascertained whether these transactions would
come under the coverage of Act. The matter must be first referred to the
concerned Assessing Officers before invoking penal provisions since no tax can
be levied except by authority of law – Flipkart Internet (P.) Ltd. vs. State of
Kerala [2015] 62 taxmann.com 387
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