Flipkart, Jabong to Pay INR 54 Cr Fine for Doing Illegal Business in Kerala

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Image Source: Dynamicwebusa

Kerala government has put a fine of INR 53.63 crore on Flipkart, Jabong and two other e-commerce companies in the crime of doing illegal business in the state.

According to an IndianRetailer report, the fine has been imposed by the intelligence wing of the Commercial Taxes Department for the year 2012-13 and 2013-14.

Flipkart has to pay the major chunk of the fine i.e. INR 47.15 crore, Jabong has to pay INR 3.89 crore, Vector e-commerce (Myntra) to pay INR 2.23 crore and Robemall Apparels (Zovi) INR 36 lakh.

The companies have been penalized in lieu of evading taxes for the past two years and the sales tax department is looking at other retailers too.

Also Read: Income Tax Department Imposes INR 23.5 Cr Penalty on Flipkart

This is not the first time when a fine has been imposed on e-commerce companies, Amazon had faced a similar situation in Karnataka when the tax authorities found out that the company was not paying the Value Added Tax (VAT).

Myntra, Jabong, Flipkart and Snapdeal had abandoned its delivery services to Kerala cities in 2014 since the state tax department had put a ban on cash on delivery service.

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  • Arun Muralidhar

    States loosing revenue is one issue that needs to be resolved.

    Especially pure consumer States like Kerala where state revenue has a huge dependence on sales tax and VAT.

    As online model takes over, state tax revenue from trucking, warehousing, retail distribution to final sale vanishes along with associated employment and money circulation.

    While it clearly shows why e-commerce is so profitable, it barely produces any business activity or revenue for the receiving state as IndiaPost doesn’t need to share revenue with the state and courier companies needn’t pay to deliver in a state.

    But I doubt whether Kerala state’s demand for penalty would stand in front of court? As such CoD by IndiaPost is legal by law and if Flipkart retailers are paying tax at the their state then they are abiding by the current laws!