Amazon in Trouble: Amazon Bangalore Warehouse for FBA Seized by Tax Authorities

Amazon India has run into troubles with the tax authorities in Karnataka. As per one of our sources with direct knowledge of the matter, the warehouse for Fulfilled by Amazon logistics segment has been seized and is causing a lot of trouble for the sellers who have their goods stocked there. 

Update: Amazon PR just contacted iamWire to clarify that even though the merchants have received a notice, the warehouse is still functional and operating as normal. However no new sellers can register the warehouse as an additional place of business.

Update: In reference to the last statement above. It says – A few sellers have received notices saying that the fulfillment center can’t be registered as an additional place of business. However, it has got no bearing on new sellers who want to opt for FBA as a service.

Below is the official email response from Amazon India

Amazon official statement

Last week, Amazon was in the news for being targeted by the Enforcement Directorate for violating FDI norms. WSJ reported that The Enforcement Directorate of the Finance Ministry is investigating whether’s fully owned Indian subsidiary has been circumventing restrictions on foreign investment in retail by selling directly to customers while making it look as if the sales are being made by other companies.

amazon warehouse

Image Source: live24india

Live Mint confirmed the news earlier today, it mentioned that the Karnataka government has served notices to more than 100 third-party merchants, ordering them to stop storing their products in Amazon’s storehouses near Bangalore. The notices say these merchants cannot register Amazon’s warehouse as their “additional place of business”.

As of now only Amazon sellers have received such a notice, nothing has been heard from those selling on other marketplaces as well. A person with the knowledge of the matter mentioned that the Tax authorities have said that they will ‘not allow this Practice’.

Related Read:  #Marketwire: DTDC Enters Into Last Mile Logistics; Freecharge's Escrow Service for Merchants & More

“We understand this to be a case where the laws have not kept pace with the new-age online business models that enable a faster, convenient and nationwide access to customers for sellers, especially small and medium businesses, at significantly low costs. We look forward to an early resolution in order to avoid closing our local warehousing operations in Karnataka and to stay on course for bringing more investments in the state,” an Amazon spokeswoman told Live Mint in an emailed statement.

  • Sobhveer Singh

    Amazon has the best possible service and the most customer satisfactory compared to any other e-commerse company. I am VERY HAPPY to see AMAZON IN INDIA! and they should definitely expand. And thats good because then other e-commerce in India like flipkart, homeshop18 and eBay will have competition and make their services better like Amazon.

    Keep in up Amazon! The best service and i encourage them to keep adding additional sellers and products on their stores and in their fulfillment centers so we can keep buying.

    Nano Biotech (P) Ltd
    Amritsar, Pb India 143001


  • Hari Rastogi

    Foreign funding in online retail is not allowed in India. The e commerce players like Flipkart, Amazon and snapdeal are showing that they are not in retail business but in business of providing software platform. So they must not be allowed to have warehouses of their own. They should be just allowed to run a platform which only connects buyers to sellers like ebay and they should not be allowed to offer any discount also. If any discount will be offered it will be offered by listed sellers only.
    -Hari Rastogi
    Activist WWA(We will act)

    • Aniruddh D

      You’re saying that only ebay type thing should allow here but not flipkart amazon snapdeal. eBay is in india from very long time and you guys are okay with it but these new guys ate not okay? Why? I know why..because eBay has not a reputation in india due to it’s business model and due to that eBay was never that much popular so you guys comfortable with eBay but these new guys put a hole and permanent dent over your business using sales after service, best support, best quality with awesome pricing. A win win for the customers so now you people scared of them. Instead of doing this cheap marketing against online retail. tell your association to educate your seller members to provide customer service and better pricing

  • Hari Rastogi

    Amazon guys are saying-“the laws have not kept pace with the new-age online business models”.
    Before starting the business they must read all the details about law of the land. If this much big mnc talk like this its like they are fools are trying to act very smart or they have confidence that they will bribe some officials and everything will be thik thak.
    Govt must take strict action and put heavy penalties for this. Law is same for all.

  • Sumit Arora

    Seems like a plot well played by #FlipKart who is fighting #Amazon on Home Turf in Bangalore…

  • Kumar

    This is the beginning of a huge Commercial tax fiasco by the Online ECommerce organisations. Basically, the e-Commerce business does not have tax regulations in India and they were allowed to do business without any prescribed norms. The Central & State Govts don’t have a Tax legislation for the E Commerce trade in India. Huge tax violations have been observed and this has got unnoticed by the Tax brigade. When FDI in Retail became the biggest controversial investment topic in India, the E-Commerce trade has destroyed the basic business fabric of the brick & mortar stores, this has resulted in huge losses for these stores and has cascading effect on the commercial real estate business in India.

    • vineet rastogi

      Tax Authorities should seize the opportunity to earn additional revenue as the vendors are choosing to bill from Bangalore address. Karnataka budget should welcome it. Can anybody highlight the wrongdoings here? It’s all transparent and accounted business. Yes, the vendors should have paid the karnataka taxes.

      • Taroon

        I agree. Karnataka Govt should be happy with the Tax collections

    • Aniruddh D

      How can be a violation? Amazon does not sell directly. It’s the sellers who sell it and the vat or any kind of local or central taxes are included in this and currently Amazon provide a service so gov only can take service tax from them nothing more then that and Amazon does not taking charges to sellers for the fulfillment and other service right now so no taxes at all and when they start to charge sellers then they ll only need to pay taxes on the charges they take it from sellers. Seller sell it via brick mortal store, online market place or own website in all case only seller is liable for sells tax or vat not a third party provider.