In what is being seen as relief for e-commerce majors, the High Court of Uttarakhand has granted an interim stay to Flipkart on the levy of an entry tax in the state.
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 was quoted by The Economic Times as saying.
“The company will have to, however, provide a bank guarantee in the event of some tax demands that arise,” he told ETover the phone from Nainital. Details of the interim order are yet to be made public. The next hearing is on April 27,” he was further quoted as saying.
The development is likely to lead other e-commerce companies as well to seek legal remedies against a government decision that they term discriminatory.
Flipkart had, on Monday, sued the state of Uttarakhand for its decision to impose a 10 per cent entry tax on goods purchased through e-commerce. Calling the levy “discriminatory”, the e-commerce giant had filed the writ through its in-house logistics arm EKart Logistics in the high court of Uttarakhand in Nainital.
Flipkart argued in its petition – filed in February – that while the standard rate of entry tax is 5 per cent, goods purchased through e-commerce companies have been subjected to entry tax at the rate of 10 per cent.
The company’s lawyers had aslo pointed out that while the standard rate of entry tax is 5 per cent, goods purchased through e-commerce companies are subjected to 10 per cent, making them expensive as compared to products bought offline.
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.