Naaptol’s all bank accounts frozen due to non payment of 23 Cr VAT

Maharashtra’s Revenue Department has frozen all bank accounts of Naaptol Online Shopping Pvt. Ltd, the company behind and their tele-shopping platform. This extreme step has been taken after Naaptol failed to pay Value Added Tax or VAT on the sale of third party goods.

The Revenue Department wants Naaptol to pay Rs 23 crore, which is the amount of VAT due on all third party goods sold by Naaptol between 2008 and 2012.

Earlier, Naaptol management had filed an appeal at the Bombay High Court seeking an “urgent hearing” on this case, as revenue officials had frozen several bank accounts on December 16th.

But the court couldn’t come up with a stay order, and as of now, all assets of Naaptol which are placed in banks are out of their reach. It is not yet clear as to how it is affecting their business operations as both their website and tele-shopping platform is active and accepting orders.

The Problem

Naaptol works as a market place where in various sellers showcase their products, and Naaptol takes a small commission from the sellers in case of any sale. The Government wants Naaptol to pay the VAT on all goods sold; whereas Naaptol is arguing that as they are not a dealer “under either of the Acts, namely Maharashtra Value Added Tax Act, 2002 and the Central Sales Tax Act, 1956”.

Moreover, all third party sellers on Naaptol are paying VAT, hence there is no requirement for them to pay additional taxes. Naaptol is anyways paying tax on the commission earned by the sellers.

Manu Agarwal, CEO of Naaptol has strongly objected this move by the Government, as he said, “We believe the department has taken this up now as there are activities going on in other states on e-commerce and marketplace companies. We have legal option from senior counsels and law firms and all of them are of the opinion that the order by the department is illegal,”, adding, “There will be no impact on Naaptol’s business. Overall I do feel such actions will impact business sentiments in India,”

Manu may be partially right here.

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