K’taka HC Directs Tax Dept To Refund INR 16.11 Cr To Flipkart

The Karnataka High Court (HC) has reportedly directed the state’s commercial taxes department to refund INR 16.11 Cr to Flipkart India. The ecommerce giant had paid the amount as part of a INR 23 Cr pre-deposit while challenging certain tax assessment orders.

As per Economic Times, a bench comprising Justice SR Krishna Kumar, in its July ruling, also directed the department to pay Flipkart interest on the full deposit amount from the date of payment until the refund is made.

Notably, the dispute pertains to Karnataka tax authorities classifying mobile phone chargers as an unscheduled commodity. Subsequently, local officials raised a demand of INR 23.01 Cr for the tax period between 2011-12 and 2014-15 via four separate reassessment orders in 2016 and 2017.

Flipkart deposited INR 6.90 Cr in cash and INR 16.11 Cr via input tax credit (ITC) while contesting the demand.

In 2022, the Karnataka Appellate Tribunal ruled in Flipkart’s favour, followed by a division bench of the Karnataka HC also later dismissing the sales tax revision petition filed by the department.

Notably, the tax department only refunded the cash portion while withholding the ITC part. It argued that such deposits could not be returned in cash. 

However, the HC has now clarified that refunds must be made in cash, regardless of whether the pre-deposit was paid through cash or ITC.

This case is part of a larger history of Flipkart’s tax disputes across states. The ecommerce major has previously faced demands from income tax authorities, ESOP-related disputes, and refund delays. 

In 2023, the Karnataka HC granted Flipkart interim relief against a tax demand of over INR 1,100 Cr linked to assessment years 2016-17 and 2018-19. Courts in Karnataka and Delhi have also ruled in favour of Flipkart and its employees in ESOP-related tax cases, holding such compensation as capital receipts rather than salary income.

That said, the company has been aggressively launching new services to create new revenue streams ahead of its IPO. In August, the company rolled out Flipkart Black, a paid subscription service positioned as a competitor to Amazon Prime. 

It also acquired a majority stake in Pinkvilla India, a digital media platform, for an undisclosed sum to boost its content play. 

Meanwhile, on the financial front, the ecommerce major’s B2C arm, Flipkart Internet, reported an operating revenue of INR 20,493 Cr in FY25, up 14% from INR 17,907 Cr in FY24. At the same time, the company managed to cut its losses by 37% to Rs 1,494 crore in the fiscal under review from Rs 2,359 crore in the year ago period.

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