Flipkart India Private Ltd has come under fresh scrutiny over allegations of continued non-compliance with the amended Goods and Services Tax (GST) provisions relating to Goods Transport Agency (GTA) services. According to sources, in a detailed letter addressed to Finance Minister Nirmala Sitharaman, Chennai-based advocate has sought immediate government intervention, accusing the e-commerce major of persisting with tax practices that were explicitly disallowed under the new GST framework.
The representation, sent on Thursday, claims that despite the government’s recent amendment to exclude e-commerce operators from claiming GST exemptions on GTA services, Flipkart continues to structure customer bills in a manner that effectively allows it to avoid tax liabilities, say sources, citing the letter.
The letter alleges that the company splits invoices into product cost and transport charges, thereby reclassifying marketplace fees as transport services and claiming exemptions originally meant for small transporters.
“Flipkart appears to be operating as if no such amendment exists,” the letter alleges, say sources. “The company persists in maintaining its previous billing model and continues to claim GST exemptions under provisions no longer applicable to e-commerce platforms.”
Background: A policy meant to plug a loophole
The Finance Ministry had recently amended the GST law to address concerns over large e-commerce platforms exploiting GTA exemptions that were originally designed to protect small goods transport operators. The change, notified earlier this year, clarified that transport services provided “by or through” e-commerce operators would no longer qualify as exempt services.
Tax experts note that this reform was a direct response to representations about possible misuse by online marketplaces, which had started issuing consignment notes and recharacterising their delivery-related charges to claim exemptions while still collecting fees from sellers.
“GTA exemptions were never meant for tech-driven e-commerce logistics models,” said a senior tax practitioner familiar with the case. “The amendment drew a bright line to ensure large platforms comply under the forward charge mechanism and do not erode the GST base.”
Allegations of dual advantage
According to his letter allegations are that Flipkart had opted for GST payment under the forward charge mechanism, but continued to issue consignment notes declaring payment of tax while simultaneously availing exemptions — a practice described as “having their cake and eating it too.”
The advocate argues that such actions amount to deliberate non-compliance, not administrative oversight. The letter also warns that the alleged practice, if left unchecked, could embolden other e-commerce players to follow suit, undermining the government’s effort to protect tax revenues and ensure a level playing field, say sources.
Revenue implications and call for action
Sources further say that the letter urges the Finance Minister to direct the Central Board of Indirect Taxes and Customs (CBIC) to initiate an immediate probe into Flipkart’s post-amendment tax practices and to quantify the potential revenue loss to the exchequer. It also recommends recovery proceedings for GST amounts “wrongfully claimed as exempt” since the amendment took effect.
“The time for voluntary compliance has passed,” the letter concludes, adding that the government’s response will “send an important message about the seriousness with which tax compliance is regarded and the consequences that await those who choose to ignore legislative amendments.”
Even as, the government is yet to take any action, say sources as it is still assessing the claims raised in the letter, industry observers say the issue could reignite debate over tax parity in the e-commerce sector, where compliance frameworks for marketplace operators have been evolving alongside legislative changes.
If pursued, this case could become a test of post-amendment enforcement under the GST regime — and a signal of how firmly the government intends to hold large digital platforms accountable for compliance with transport and logistics-related tax provisions.
