Saturday, 17 December 2016

HC : E-commerce sales envisaging goods movement from one state to another, constitutes 'inter-state sales'

HC grants relief to WS Retail, sale of mobile phones, computer spare parts and personal healthcare products via online portal, qualify as an ‘inter-state sale’, not liable to local sales tax / VAT; Notes assessee’s contention that for purpose of delivery of goods within Union Territory of Puducherry, assessee installed a delivery hub in Puducherry - E-Kart logistics, which acts as a sorting
facility to sort deliveries and that there is no sale or inventory holding transactions effected therefrom; Referring to judicial precedents in case of K. G. Khosla & Co.(P) and Tata Iron And Steel Co, HC culls out the legal principle to be satisfied for determining whether a transaction is an ‘inter-state sale’ and states that, primordial test for an interstate sale is that sale should have occasioned movement of goods or movement should have been incidental to sale; Observes, it is not disputed that when purchaser exercises his option to purchase goods via online platform, they are outside the State of Puducherry (i.e. in Karnataka), and thus, such exercising of option of purchase occasions the movement of goods, which is also demonstrated by perusal of purchase order; Rejects Revenue contention that, consignor and consignee both being assessee since consignment moved from Karnataka to Puducherry on “self basis”, sale to customer in Puducherry would amount to local sale and transaction from warehouses hub to delivery. hub is only a stock transfer; Relying on Rukmini Mills, HC states that merely because a weigh bill has been drawn in the name of 'self' would not per se be a reason to disbelieve the nature of transaction and to treat it, as a local sale; Relying on Sahney Steel ruling, HC states that presence of depot at Puducherry cannot make transaction local since purchase effected is for a particular product on exercise of option to purchase, a bill is raised in the name of purchaser and identified product ordered by purchaser is sent to Puducherry, thus appropriation takes place in State of Karnataka; As regards question whether situs of saiddepot would be a relevant factor, refers to SC ruling in Onkarlal Nandla and states that, since purchase contract comes into an effect the moment, a purchaserexercises option through online platform, purchase invoice is generated in his name and purchase occasions in movement of goods, therefore, situs can be in any either one of the States; Also, refers to Kerala HC ruling in Flipkart Internet and Ors which quashed penal proceedings against Flipkart for e-commerce sales to customers within State : Madras HC

No comments: