Flipkart breathes easy as Calcutta High Court stays entry tax on online shipments

India’s e-commerce giant Flipkart has seen another success in its battle to remove entry taxes from online shipments. After the Uttarakhand High Court ordered a stray over this issue, Flipkart sued the West Bengal government, and managed to get favourable judgement from the Calcutta High Court.

This would definitely act as restrict for other states that want to impose similar entry taxes on online goods.

The petition was filed in Calcutta High Court by Instakart Services, the company behind EKart, the logistics arm of Flipkart. The petition, which was reviewed by ET, claims that the West Bengal government is imposing an entry tax of 1% on the value of every consignment that eKart delivers in the state. Flipkart has, in turn, argued that this entry tax is without any "legal" basis.

"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 filed in the last week of March.

West Bengal government had mandated an advance payment of 1% entry tax as a prerequisite for generation of "waybills".

In its order dated April 5, the Calcutta High Court has said that the government cannot insist on the payment of 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, a copy of which was reviewed by ET.
On the other hand, the state of West Bengal had argued that since similar matters from other states have already reached the Supreme Court, it too has applied to SC to ensure that this matter can be decided at the highest level.

"Hearing on the petition filed by Flipkart, the court has put a stay on the collection of entry tax on the goods entering the state of West Bengal. The collection of entry tax was anti-consumer and was reducing the benefits of ecommerce for the residents of West Bengal," a Flipkart spokesperson told ET via mail.

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