The Bombay High Court set aside the impugned order by which the Petitioner was termed a “commission agent”. A division bench of this Court comprising Hon’ble Justice Sunil B. Shukre and M.W. Chandwani held that the delivery partners of Flipkart cannot be termed as ‘dealer’, ‘importer’ and ‘commission agent’ and are not liable to pay local body tax (“LBT”).
Brief Facts:
In this petition, the Petitioner questioned the legality and correctness of the order dated 03.12.2017. By this order, the challenge made by the Petitioner to the show cause notice issued by the Corporation calling upon the Petitioner to register itself as “Dealer/Importer” for the purpose of assessment and levy of local body tax, had been rejected. The Commissioner had reasoned that the Petitioner is working as a “commission agent” as it imports goods from outside and delivers goods to the buyer within the Municipal Corporation's limits. The internet platform through which an individual buyer purchases goods stands in the name of “Flipkart Internet Pvt. Ltd”. The issue raised before this Court for consideration was-
- Whether the Petitioner would be an entity that is liable for assessment and levy of LBT?
Contentions of the Petitioner:
The learned Counsel for the Petitioner contended that by considering the role of the Petitioner in the whole transaction, they cannot be termed either a “Dealer” or “Commission Agent” or “Importer” within the meaning of the relevant provisions of the Maharashtra Municipal Corporation (Local Body Tax) Rules, 2015, r/w. relevant provisions of the Municipal Corporation Act, 1888 (“MMC Act”). He submitted that what is charged from the customer by the Petitioner is neither the commission nor any percentage of prices but only charges levied on transportation and delivery of the goods.
Further, it was argued that in these transactions, the Petitioner only acts like a transporter, and it is the individual buyer who imports goods purchased for his use and that the Petitioner does not receive any commission upon sale of the goods. Therefore, he submitted that the Petitioner is not liable under the provisions of Local Body Tax Rules and, as such, is not required to register himself under these rules to pay any local body tax.
Contentions of the Respondent:
The learned Counsel for the Respondent submitted that no assessment of LBT had been made, and the Petitioner is only called upon to register itself for the purposes of assessment and levy of LBT. He further submitted that if it is the contention of the Petitioner that he is not liable to pay any local body tax, the Petitioner can always make his submission on that line, but, for that purpose, the Petitioner would have to register itself first for the purpose of local body tax. In support of his contention, the learned counsel had invited the attention of this Court to Rules 3 and 7 of the MMC Act.
Observations of the Court:
This Court, after considering the relevant provisions which define 'importer' and 'dealer' came to the view that in the present case, the goods brought from outside by the Petitioner are for the purpose of being delivered at the doorstep of the individual buyer. After the perusal of Rule 3, the Court noticed that the requirement of registration for the purpose of assessment and levy of LBT under Rule had been prescribed only in case of a dealer who is an importer or whose turnover of all sales or purchases during the year is not less than the amount prescribed therein.
In the present case, the Petitioner is neither a dealer nor an importer as per the definition given in the MMC Act. However, the impugned order considered the Petitioner as a commission agent but, regarding the activity carried out by the Petitioner and service rendered by it, this Court found that the Petitioner could not be said to be an agent, either of the seller or the buyer. Therefore, Petitioner cannot be called to be an entity that is a commission agent or any other agent or an auctioneer importing goods on behalf of the principal.
The decision of the Court:
The Bombay High Court set aside the impugned order dated 03.02.2017 issued by Respondent No. 2 and allowed the present petition.
Case Title: M/s. Instakart Services Private Limited v. State of Maharashtra and Ors.
Coram: Hon’ble Justice Sunil B. Shukre and M.W. Chandwani
Case no.: WRIT PETITION NO. 2565 OF 2017
Advocate for the Petitioner: Mr. Rafiue Dada
Advocate for the Respondents: Mr. Abhijit P. Kulkarni and Ms M. P. Thakur, AGP
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