In a huge relief to the taxation woes which have recently gripped Flipkart, the Calcutta High Court has put a stay on the state government’s order to levy 1% entry tax on the value of each consignment delivered by Flipkart in the state. The order had made the tax as a mandatory prerequisite to generate “waybills” which are required for delivery of shipments.
Instakart services which run the logistics arm of Flipkart, eKart had filed a petition in high court in last week of March alleging that the tax was without any legal basis and led to a high cost of goods which ultimately affected the customers in the state.
It has also resulted in increased cost of goods and materials brought into the State of West Bengal by them for consumption or use by the end customers in the State,
said the petition.
In response to the petition, the court released an order dated April 5 which said that the state cannot insist the company to pay the entry tax.
As a consequence, the petitioner will be entitled to generate waybills in terms of the said rule without payment of any entry tax and if the programme or the system has to be altered for such purpose, the state is directed to do so immediately such that no inconvenience is occasioned to the petitioner in the electronic generation of waybills without payment of entry tax,
said the order.
The state government, on the other hand, has decided to take the issue to the Supreme Court where many other cases of similar nature are pending so a decision could be made at the highest level.
It is not the first time that Flipkart has encountered the entry tax problem as previously Uttarakhand State government has also levied an entry tax of 10% on the consignment of products delivered by Flipkart. Flipkart has filed a petition for that matter also whose decision is pending and may also go the Supreme Court eventually.
Flipkart believes that the decision of Calcutta HC will also prove beneficial in their fight in the other states as well in the similar issues.
For now, on the stay decision of Calcutta High Court, Flipkart’s spokesperson said in an emailed response that the entry tax was anti-consumer and the court’s decision would ultimately benefit the consumers who would not have to pay the additional tax amount on products bought online.