VAT not leviable on e-commerce websites- Kerala HC"
Recently in the case of Flipkart, Kerela High Court quashed the demand on Flipkart on sales to customers within state. Further, it was held that no VAT is leviable on website selling goods via electronic mode. The HC rejected the view of the revenue department that e-commerce transactions are subject to “sales on approval” which take place within the State and hence, the assesee is liable as an ‘agent’ to the seller.
In the said case, the department of Revenue of the state of Kerela held the view that ecommerce transactions are deemed to be completed in Kerela since the goods are delivered and payment thereof is collected in the state of Kerela. The department was of the view that the buyers placed orders for goods without knowing the name of the seller or place of supply and the assessee is liable to pay VAT as the transaction.
On the contrary, the assesee argued that as per Article 286 of the Constitution of India and Sec. 3 of CST Act, 1956 tax is payable in the state from where the sales have been occasioned. In the market place model opted by Flipkart, the seller has already discharged tax in full and therefore the place of delivery of goods hold no relevance. Hence no VAT demand should be raised as the assesee i.e. the ecommerce website was only acting as a facilitator to the sale transaction and not as a seller.
The Kerela HC, justifying the assessee’s viewpoint held that no State VAT is leviable on such ecommerce based websites on sales to customers within the state.
The copy of the judgement is still awaited.