I don't know if you're referring to the same incident but IIRC, the problem in that case was that Amazon was actually not charging/collecting taxes in several States. This gave them an unfair advantage over B&M stores that were charging/collecting taxes on sales. Link for more info -
http://en.wikipedia.org/wiki/Amazon_tax
Not sure if the above issue applies to Amazon.in which categorizes itself as a "Service Provider" rather than a "Seller".
There are already cases where Amazon.in is facing issues in India. One such example is Amazon's "Fulfilment Centers" (ie. - the "Amazon fulfilled" storage facilities). Amazon has (allegedly) spent/is investing a lot of money (reportedly US$ 1-2 Billion) for setting up "Fulfilment Centers" in Mumbai, Bangalore, Delhi, Chennai, Jaipur, Ahmedabad, and Tauru. In essence, these are modern supply & distribution chains - something that India sorely lacks ATM.
The problem is, the Karnataka Govt. states that Amazon is in fact "the owner of these goods" (ie., the items stored at their "Fulfilment Centers") and therefore it needs to pay VAT levied by state governments
at each stage of the distribution process — on the value of the goods at that stage!
Obviously Amazon has protested the issue but the Karnataka Government doesn't seem to agree with Amazon's viewpoint. I have little doubt that if Karnataka Govt. persists with this line, Amazon will simply close their warehousing operations in Karnataka.
Its not just Amazon.in BTW. From a news clip -
Third party merchants who have been working with Amazon have received notices from the Karnataka government tax authorities to stop storing their products in Amazon’s storehouses near Bangalore. The government has also banned Amazon from selling any electronics and other products from its warehouse in the state. The notice says that these merchants cannot register Amazon’s warehouse as their “additional place of business”. Amazon’s merchants who work with Flipkart have also received this notice forcing them to stop supplying to Flipkart in Bangalore, as reported on livemint.
Link for more info -
http://www.bgr.in/news/amazon-india...rnataka-government-everything-we-know-so-far/
Another news clip states -
The Karnataka government’s tax department has sent notices to third party merchants working with Amazon India, directing them to stop storing their products in Amazon’s Bangalore fulfillment center.
The report cites two sources to state that the government has sent license cancellation notices to more than 100 third party merchants that primarily sell electronics, apparel, books, toys and other products, thereby stopping Amazon India from selling products through its Bangalore fulfillment center. These apparently include many of the top sellers at Amazon India.
These issues arise primarily due to the fact that India still has many antiquated and outdated laws that pre-date the origin of the Internet & how Internet related business models work for that matter.
A much more serious implication of the above issue is that if Amazon.in is, in fact, categorized as a "seller" rather than the "service provider" it claims to be, they would be in gross violation of India's FDI Rules that prevent more than 51 percent investment in the retail sector!
This would have disastrous consequences not just for Amazon.in but for online retailers like FlipKart and Snapdeal as well due to their foreign VC funding.
There is hope though.
Karnataka chief minister Siddaramaiah, who also holds the finance portfolio, has apparently directed the commercial taxes department to study laws and issues related to e-commerce and recommend necessary changes.
"The issue is not just confined to Amazon, but to all e-commerce firms. The government is trying to address the issue. We should have clarity in about a month's time,'' said an official in the finance department.
You can read the full article here -
http://timesofindia.indiatimes.com/...mmends-change-of-law/articleshow/42744348.cms
, That's like 2 months old news. And flipkart already answered ED saying "We are in compliance with the laws of the land... will cooperate with authorities when required". And that report has nothing to do with the big billion day sale. It's just bad reporting from CNNIBN.
