Supreme Court stays NCLAT probe order against Flipkart

By: |
December 03, 2020 6:25 AM

The NCLAT had erroneously placed reliance on only one fact set out in a separate Income tax proceedings related to Flipkart India, senior counsel Harish Salve, appearing for Flipkart argued.

The AIOVA in its appeal to NCLAT had stated that the CCI order is liable to be quashed as the fair trade regulator “was unjust in ruling out dominance prima facie even after it had submitted ample evidence to prove otherwise”.The AIOVA in its appeal to NCLAT had stated that the CCI order is liable to be quashed as the fair trade regulator “was unjust in ruling out dominance prima facie even after it had submitted ample evidence to prove otherwise”.

The Supreme Court on Wednesday stayed a National Company Law Appellate Tribunal order that directed the Competition Commission of India (CCI) to launch a probe against Flipkart on alleged charges of abuse of dominant position.

The NCLAT had ordered a probe after setting aside CCI’s 2018 order which had absolved Flipkart of such allegations levelled by the All India Online Vendors’ Association (AIOVA).

A bench led by Chief Justice SA Bobde sought response from the CCI and AIOVA on a joint appeal by Flipkart India and Flipkart Internet against the appellate tribunal’s order directing the anti-trust watchdog for fresh investigations into the allegations relating to contravention of the provisions of Section 4 of the Competition Act by Flipkart.

The NCLAT had erroneously placed reliance on only one fact set out in a separate Income tax proceedings related to Flipkart India, senior counsel Harish Salve, appearing for Flipkart argued. He further said that the tax proceedings of 2018 were subsequently set aside by the Income Tax Appellate Tribunal.

Flipkart said that the NCLAT had based its decision on the income tax assessing officer’s findings that Flipkart India was selling goods to retail sellers like WS Retail Services and others who subsequently sell their goods as sellers on Flipkart.com, the internet platform. The findings also noted that there was a link between Flipkart India and Flipkart.com, it stated.

“The ITAT proceedings were solely in relation to Flipkart India (in relation to its B2B business) and the AO’s observations, even if taken at their face value, have no bearing whatsoever on Flipkart Internet (which is engaged in the business of providing marketplace services),” the appeal stated, adding that Flipkart India and Flipkart Internet operate in different market spaces and at different levels of the supply chain.

The AIOVA in its appeal to NCLAT had stated that the CCI order is liable to be quashed as the fair trade regulator “was unjust in ruling out dominance prima facie even after it had submitted ample evidence to prove otherwise”.

The CCI in its November 6, 2018, order had stated, “Flipkart India is not dominant in the relevant market of services provided by online marketplace platforms for selling goods in India..therefore the issue of abuse of dominant position does not arise”. No case of contravention of the provisions of section 4 of the Competition Act is made out against Flipkart India (wholesale unit) and Flipkart Internet (marketplace), the CCI had said.

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