SC to examine if e-tailers liable for local tax

NEW DELHI: The Supreme Court on Friday agreed to examine whether the burgeoning Rs 6-lakh-crore business by e-commerce platforms is liable for local body taxes on a Pune municipality’s plea against a Bombay HC ruling that they were not amenable to such levy, being mere transporters of goods to the consumers’ doorsteps.

Pune Municipal Corporation’s counsel Arvind S Avhad told a bench of CJI D Y Chandrachud, Justices J B Pardiwala and Manoj Misra that neither Flipkart nor its sister concern Instakart pay octroi and local body taxes for bringing goods from another jurisdiction to Pune city limits.
The CJI-led bench asked, “Why don’t you go after the dealer?” Avhad said the municipality is unable to track the dealer as the bookings are done on the internet. “The municipality is losing a yearly revenue of Rs 50 crore legally due from the e-commerce platforms,” he said.
If the claim of Pune municipality about the extent of octroi it would garner from e-commerce platforms is true, then most tier 1, 2 and 3 towns where purchasing of goods through e-commerce platform is becoming rapidly popular, other municipalities too would eagerly await the outcome of this case in the SC.
For Instakart, senior advocate Tarun Gulati reiterated the findings of the HC – that it is neither an importer, trader nor a dealer, that it is a mere transporter reaching the goods at the doorsteps of the consumer, hence not amenable to local body taxes.
The CJI asked “Are you not disposing of the goods, which would come under the ambit of local body tax?” It then agreed to examine the issue raised by Pune Municipal Corporation, condoned the delay in filing of the appeal against the January 20 HC judgment, asked Istakart to file its response in three weeks and posted hearing on December 5.
The HC had said, “In the present case, the goods which are brought from outside by the petitioner (Instakart) into the limits of Pune Municipal Corporation, as can be seen from the operations carried out by the petitioner, are not for his own use or for earning commission or sale, but are for the purpose of being delivered at the door step of the individual buyer. In other words, what the petitioner is doing here is importing goods for the purpose of delivery to some other person and for this purpose, the petitioner acts like a courier or postman or delivery person. Thus, activity of the petitioner would not be covered by the definition of the word ‘importer’.”
It had ruled that Instakart is not a dealer or agent within the contemplation of the Maharashtra Municipal Corporation Act and found that it was also not a commission agent. It had set aside the Corporation’s 2017 decision to levy octroi on goods transported by Instakart into Pune city.