Amazon India has got a relief from its three-year-old tax litigation with the Karnataka government. With the onset of the goods and services tax (GST), the Karnataka commercial tax department said that the dispute with Amazon India is over, and there are no differences as far as the interpretation of law is concerned.
The development will now allow Amazon India to accept taxable goods from Karnataka-based sellers for its “Fulfilment by Amazon” (FBA) service. The provoked dispute coming under the sphere of the earlier VAT regime forced many online sellers from Bengaluru to take a circuitous route to fulfil their sale transactions by FBA.
The issue in Karnataka was that the tax department wanted Amazon and other e-commerce companies to pay VAT on third-party goods that were stored in their warehouses even before customers ordered for these products.
During this period, the difficulty in selling goods online using Karnataka’s VAT licence forced many Bengaluru-based sellers to get their VAT registrations from neighbouring Hosur (Tamil Nadu) and Telangana and using Amazon’s fulfilment centres in those states, even as Amazon Bengaluru fulfilment centres limited its inwards of goods to only “non-taxable” items from Karnataka-based sellers.
Sellers sources said that the tax litigation had put them at a disadvantage compared to other states’ sellers. They said the tax dispute led Amazon India to register only tax exempted sellers or categories in its Bengaluru fulfilment centres.