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Flipkart Says HC has Stayed Entry Tax in U khand

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The High Court of Uttarakhand has granted an interim stay to Flipkart on the levy of an entry tax in the state, its lawyer said, a development that is likely to lead other ecommerce companies as well to seek legal remedies against a government decision that they term discriminatory.
Wednesday's interim order -which will be in force until the court makes a final decision -allows Flipkart to not pay any entry tax for now, lawyer Chetan Joshi said. “The company will have to, however, provide a bank guarantee in the event of some tax demands that arise,“ he told ET over the phone from Nainital. Details of the interim order are yet to be made public. The next hearing is on April 27.
The entry tax is imposed on goods that come from outside the state.On Monday, ET reported that Flipkart has sued Uttarakhand for its decision to impose a 10% entry tax on goods purchased through ecommerce. The company had filed the petition in February through logistics arm EKart Logistics. Flipkart argued that while the standard rate of entry tax is 5%, goods purchased through ecommerce companies are subjected to 10%, making them expensive as compared to products bought offline.
The court was ready to consider arguments on the discrimination part since one dealer is not paying additional levy while another has to pay it making its goods pricier, Joshi said.
Flipkart didn't immediately comment on the interim order.
Since the interim order has granted stay only to Flipkart, other companies may look at filing similar petitions either collectively through an industry association or at an individual level. Subho Ray, president of the Internet and Mobile Association of India said: “We are delighted that the court found so much merit in the writ that it decided to grant immediate relief by issuing a stay order.“
So far, companies were waiting for the Flipkart case to be heard, now that there is a kind of favourable judgement, the industry will take a call on its next course of action, said an industry expert. The order may also act as a deterrent to half a dozen states which are contemplating imposing a similar levy on ecommerce transactions.
The Economic Times, New Delhi, 17th March 2016

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