Why Flipkart Is Not Delivering My Shipments to Kerala Anymore

Posted on June 30, 2014 in Business and Economy

By Anju Anna John:

One of my greatest woes about going back to Kochi for the next semester stems from the fact that Flipkart has stopped delivering in Kerala[1]. As I skim through the items that I want to order and try to check if they deliver to my address, I am told that ‘This product is not available in 683503 (my PIN number)’. In fact, Flipkart is not the only online retailer that has stopped providing services to their consumers in Kerala, popular sites like Snapdeal, Jabong and Myntra had also stopped services to postal addresses within the state of Kerala. However, eBay and Amazon continue to deliver, albeit with longer shipping durations.

flipkart

One of the primary features that helped Flipkart gain its popularity was the Cash-on-Delivery feature. This service seems to be the root cause that triggered a string of events that have resulted in the present problem. The Kerala Commercial Sales Tax Department is of the view that, in case of the Cash-on-Delivery option, the sale takes place within the State and thus, becomes liable to be taxed by the State.

The modus operandi of most online retailers is to hire third-party logistics to deliver their merchandise to the consumers. According to the Circular No. 16/2011 , in case of inter-state movement of goods, the shippers are expected to fill in the Declaration Form 8F under the Kerala Value Added Tax Rules, 2005 [Rule 66(6)]. A courier company (Blue Dart) was penalised to the tune of Rs. 3 Crore, by the Commercial Sales Tax Department. Following this, the matter has been taken to the court and a verdict is awaited regarding the same[2].

However, Vijay Kumar, CEO of Express Industry Council of India, has been reported to have stated that, Blue Dart has managed to get a stay on further proceedings from the High Court. If this is in fact the case, Blue Dart and other courier services would be able to resume the Cash-on-Delivery service until the matter has been finally decided by the court. Thus allowing e-Commerce sites like Jabong and Myntra to resume the Cash-on-Delivery service for the time being.

There are speculations by online shoppers in Kerala that the Sales Tax Department’s policies are in order to help the local business . Although this may be disputable, there is no denying the fact that the present situation has benefitted the retail market in the State. Kerala is largely considered a consumer state with a large NRI population.

The essential question that this issue has raised is whether the Cash-on-Delivery option (in pursuance of an e-commerce purchase) should be subject to Central Sales Tax (CST) or the State’s Sales Tax Department? Or both? A uniform tax policy with regard to e-commerce across the nation is the need of the hour.

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[2]Source

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