E-commerce giant Amazon has put on hold future investments in its warehouse operations following queries raised by the commercial taxes department here. The Karnataka government is now trying to arrive at a solution soon on the value added tax (VAT) dispute with Amazon’s operations in the state and the decision could be made as early as this month.
A senior government official told FE that they were expecting chief minister Siddaramaiah to take a decision and a meeting will be held sometime this month or the next.
Currently, a status quo situation prevails on the issue which began last year when Karnataka’s commercial taxes department asked Amazon to pay VAT on behalf of sellers as it was acting as a commission agent, an interpretation the ecommerce company has disputed.
The department had also cancelled permissions given to some sellers who had registered Amazon’s Fulfillment Centre near Bengaluru as their additional place of business without disclosing it was a shared facility. “We are not precipitating anything,” said Karnataka’s finance secretary ISN Prasad, adding that there will be a meeting with the CM for a decision. It is not clear whether Amazon will be asked to participate in this meeting. According to the government, no other ecommerce company has a problem with the rules at present. “We understand the situation to be a case where the laws have not kept pace with the new-age online business models that enable a faster, convenient and nationwide access to customers for sellers,” said an Amazon spokesperson.