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Karnataka High Court orders Tax Department to refund Flipkart Rs 16 crore in cash
The case originated when the department classified mobile phone chargers as “unscheduled commodities” and imposed a higher tax rate, raising a demand of ₹23 crore against Flipkart.
The case originated when the department classified mobile phone chargers as “unscheduled commodities” and imposed a higher tax rate, raising a demand of ₹23 crore against Flipkart.
The Karnataka High Court has directed the state’s commercial taxes department to refund Rs 16.1 crore in cash to e-commerce giant Flipkart, along with applicable interest. The ruling came in connection with a long-standing dispute over tax reassessment orders from the financial year 2016–17.
The case originated when the department classified mobile phone chargers as “unscheduled commodities” and imposed a higher tax rate, raising a demand of ₹23 crore against Flipkart. The Walmart-backed retailer contested the demand and made a pre-deposit of the amount, splitting it between cash and input tax credit (ITC) from its electronic credit ledger (ECL).
While the department refunded the ₹6.9 crore paid in cash, it refused to return the Rs 16.1 crore deposited via ITC, arguing that such payments could not be refunded in cash. Justice S.R. Krishna Kumar dismissed this reasoning, holding that all refundable amounts—regardless of whether deposited in cash or through ITC—must be repaid in cash.
The court also clarified that a mobile phone and its charger constitute a single package and therefore cannot be subjected to separate tax classifications.
Flipkart initially challenged the reassessment before the joint commissioner of commercial taxes (appeals) in 2017, but its case was dismissed. In compliance with procedural requirements, the company deposited 30% of the demand (₹6.9 crore) in cash and later paid the remaining 70% (Rs 16.1 crore) using ITC while appealing to the Karnataka Appellate Tribunal (KAT) in 2019. In March 2022, KAT ruled in Flipkart’s favour. The high court subsequently dismissed the department’s revision petitions in 2023, affirming the tribunal’s decision.
Despite this, the department refunded only the cash portion, prompting Flipkart to seek relief from the High Court.
With the latest ruling, Flipkart is set to receive the withheld Rs 16.1 crore in cash along with interest on the full ₹23 crore deposit, bringing the years-long dispute to a decisive close.
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