Kochi: Holding that levying of tax from Flipkart is illegal, Kerala High Court on Tuesday quashed a showcause notice asking Flipkart to explain why penalties of Rs 47.14 core should not be imposed on it for violating the Kerala Value Added Tax Act.
Justice A.K. Jayasan-karan Nambiar observed that through the notice the government proceeded to draw definite conclusions as regards the commission of an offence by the assessee rather than the reasons that prompted the revenue authorities to suspect an evasion of tax and calling for the explanation.
The court observed that the revenue authorities must realise that fundamental constitutional percept under Article 265 is that no tax shall be levied or collected except by the authority of law.
“There is no indication in the notice as to why the revenue authorities considered the petitioner as a dealer or why the transactions in question had to be treated as local sales as against inter-state sales,” the court said.
The court further observed that the WS Retail, the seller responsible for effecting majority of the sales to the customers in Kerala through the online portal of the petitioner, is registered as a dealer under the Kerala Value Added Tax Act.
Flipkart argued that they are just acting as a platform for the customers to buy goods. The sellers of various goods would sell their products directly to the buyers, it said.
