Taxing "SERVICE" - even if no service OR Recipient of, OR Fee for...

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Centre to look into complaints against Flipkart sale

< Taxman’s sword hangs over e-commerce firms

XTRACT 

The e-commerce companies contend that they do not have to pay VAT on products sold from their warehouses through their electronic platforms as they follow the ‘marketplace’ model. Ownership of the products, they contend, lies with the third-party vendors, who store their products after approval by state tax authorities.

<> As has been repeatedly  canvassed, for quite some time now by unbiased and independent  'thinking-circles", the ubiquitous  levy of service tax,  has been increasingly spreading its obnoxious , nay harmful  tentacles,  right and  left, with no thought being given even to the basic norms, governing or supposed to govern. To be precise, everything other than a ‘sales’  activity is sought to be  recklessly roped in for the purpose, wherever needed by invoking/extending  the dreaded concept of “Deeming”; without  having regard to the criteria / f actuality, such as, -(1) whether a given activity has the basic characteristics of "Service" , in its ordinary and legal sense as well;  (2) is there a recipient, so identifiable ,  of the ‘service’ , and (3) is there any ‘privity of contract’ per se,  in pursuance whereof a fee could be regarded to be chargeable or actually charged,  so as to be burdened with such a levy . In short, the threat of the levy , ab extra, by and large uncertain and unpredictable, has been  precariously hanging like a Damocles’ sword , being wielded by the empowered authority (ies)  sans any rhyme or reason or logical thinking , in a typically cavalier trait.

(OPEN TO ‘EDIT’ by thinkers, invited to share )

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Further thoughts considered worth sharing:

WPRT > “Who is funding Flip kart’s massive discounts?

A) “An important outcome, says tax experts, would be that e-commerce firms would then be considered to be the owners of the goods and therefore treated as traders, leading to violation of FDI norms on multi-brand retail, if they had any foreign equity holding.”

One fails to readily see or appreciate the logic behind such a view prima facie on a faulty or lopsided logic. It is patently incomprehensible how such a consequence or inferences be rightly made simply because the tax authority happens to , for his own reasoning, validly or otherwise,  impose VAT (or service tax , or sales tax)

Certainly, these are aspects, on which no ordinary mortal , such as the common readers, - that is, none other than enlightened experts on the subject , - could venture to offer a satisfactory but helpful  opinion, for serving  frightfully the common good.

B) The narration there under, if read perceptively, and intuitively in between lines, appear to be pregnant with clues. For instance, one is left wondering whether, this is a business (or industry) practice a professional, though not often, may have come across in course of tax practice. That is, of a foreign enterprise venturing to, also continuing to, directly or indirectly do business "with India" (as, for purpose of taxation, significantly different from "in India"); especially, despite, as is understood from the narration herein, resulting in an overall  "loss" there from. And, if and when queried, the more or less acceptable, (and not easily reject-able, hence accepted) explanation successfully offered to the authority is that the loss making venture has the objective of making good, by recovering to the extent possible, the cost incurred on over production of goods, or overrun of the fixed costs/ overheads,  which happen to have been incurred inevitably even in the normal course.

 An Update

As more people shop online, malls to see fewer visitors: Assocham

The conveyed message, blatantly reflects the inescapable facts / unavoidable reality of life:

1.   So long as “affordability” in monetary terms is the deciding or influencing factor, nothing else on earth can deter or make an iota of difference to the lifestyle deliberately chosen by the consumers, literate and illiterate alike, and the obvious corresponding factors driving / chasing the supply of goods online.

2.  Same way, regardless of the dissuading factors such as the threat of taxation, in any form - sales tax, VAT or Service tax, or any other, real or imaginary, could be expected to make any appreciable dent in the enterprising online traders.

Why then should anyone, concerned or not,  simply  lament or complain wearily, just for the heck of doing so,  knowing full well that is going to serve no enviable purpose ?

If looking for consolation, as a great visionary across the globe once bluntly said: The world affairs (in its most comprehensive sense) have , as history bears testimony, always been messed up, with no  let-up in sight ; and most likely would continue to be messed up , come what may .

Hefty e-commerce is here for good

Textbook anachronism

Sanjeev Ahluwalia in Opinion India

Great leap online: Government mustn’t get ensnared in overbearing regulation of e-commerce