Kerala HC quashes Rs 47 crore penalty on Flipkart

The Kerala High Court on Tuesday quashed state government’s orders imposing huge penalties on online retailers Flipkart and Myntra for non-payment of value added tax (VAT) for goods sold online and delivered in the state. Both the companies had contended that they only offer an online marketplace and that taxes are paid by the respective sellers in their home states.

Justice AK Jayasankaran Nambiar considered petitions filed by Flipkart Internet Pvt Ltd and Vector Ecommerce Pvt Ltd, which operates the portal Myntra.com. Both the companies are based in Bengaluru.

The court said government should bear in mind the fundamental constitutional precept under Article 265 that no tax shall be levied or collected except by authority of law.

Commercial taxes department of the state government had asked Flipkart to pay Rs47 crore as penalty whereas Myntra was ordered to pay Rs2.23 crore. The penalties were imposed by considering the total turnover of the companies in Kerala as the total sales turnover.