To recover the value added tax (VAT) of worth over INR 23 crore on the sale of third party goods, Maharashtra’s revenue department has frozen multiple bank accounts of e-commerce platform Naaptol.
As per a LiveMint report, Manu Agarwal, CEO, Naaptol has said that all the vendors of the firm are registered dealers with the sales tax department and pay VAT. “We believe the department has taken this up now as there are activities going on in other states on e-commerce and marketplace companies. We have legal option from senior counsels and law firms and all of them are of the opinion that the order by the department is illegal,” he added.
He also added that the state revenue department had first broached the issue with the company two-and-a-half years ago and tax demand pertains to the financial years from 2008 to 2012.
The e-commerce firm has argued with the Bombay high court that it was not liable to pay VAT as it wasn’t a dealer under the Acts, Maharashtra Value Added Tax Act, 2002 and the Central Sales Tax Act, 1956. The court agreed to lift the attachment order of the revenue department on the condition that Naaptol will deposit INR 10 crore in a separate bank account.
According to the high court order, the firm has now 4 weeks to file an appeal against the tax demand.
Recently, Amazon was in the news for being targeted by the Enforcement Directorate for violating FDI norms, and its Bangalore warehouse for FBA was almost seized by the tax authorities in Karnataka. Earlier this month, a warehouse operated by Flipkart based out in Ghaziabad has been raided by Commercial Taxes Department of Uttar Pradesh for non-compliance with the rules related to import of goods.
It appears that all the State Governments are recognizing e-commerce as a serious business and are getting more stringent with the policies. However, since these occurrences are now more common than ever, the central and state bodies could come up with defined guidelines that online retailers will have to follow, so as to avoid such situations in future.
Image Source: Naaptol.com