OPEN APP
Home >Companies >Start-ups >Flipkart, Swiggy halt work with vendors under I-T radar
FILE PHOTO: The logo of India's e-commerce firm Flipkart is seen in this illustration picture taken January 29, 2019. REUTERS/Danish Siddiqui/Illustration/File Photo (REUTERS)
FILE PHOTO: The logo of India's e-commerce firm Flipkart is seen in this illustration picture taken January 29, 2019. REUTERS/Danish Siddiqui/Illustration/File Photo (REUTERS)

Flipkart, Swiggy halt work with vendors under I-T radar

  • The survey is part of the government’s drive since mid-November against the use of fake invoices by businesses for wrongfully securing input tax credits

BENGALURU : Flipkart and Swiggy, which faced surveys at their Bengaluru offices by income tax (I-T) officials this week, have suspended work with three third-party vendors who are alleged to have evaded taxes, said two people aware of the matter.

For Flipkart, the vendors are resource management and staffing solution companies--Merlin Facilities Pvt. Ltd. and Surya Team Management Pvt. Ltd--which allegedly evaded taxes through bogus input tax credits. The promoters of the companies have also fled the country, said one of the two people mentioned above, requesting anonymity.

As per its website, Merlin Facilities, which caters to recruitment and staffing needs of companies, claims to have more than 50 clients including Flipkart, Myntra, Swiggy, Hyatt and Taj Sats.

Merlin had in the past also worked with B2B marketplace Udaan as well as fresh supply-chain startup Ninjacart.

On Wednesday, about 25 I-T officials visited Flipkart’s office at Embassy TechVillage in Bengaluru to survey payments made by one of its group companies, InstaKart Services Pvt. Ltd., to these third-party vendors.

The I-T department completed its survey of InstaKart on Thursday, the second person said.

In December, InstaKart had filed an instant writ petition at the Delhi High Court, against the Directorate General of GST Intelligence, alleging that the latter was coercing it to pay GST, which was not deposited by its suppliers--Merlin Facilities and Surya Team Management.

In its petition, InstaKart claimed that it has paid the GST amount of 20.12 crores, to vendors against the tax invoices issued to it, in compliance with Goods and Services Tax (GST) laws.

“The investigation by the GST Intelligence wing concerns the non-payment of GST by two vendors. We are merely cooperating with the authorities to help with their findings to trace and track any wrongdoings by such vendors. We have paid each and every invoice of these vendors through banking channels and all documentary evidence has already been submitted to the department. The investigation is not to be misconstrued as being related to any wrongdoing by us - any such allegation is vehemently denied by us," according to a Flipkart statement issued in December.

A Flipkart spokesperson also said on Friday that the company’s transactions with the concerned vendors are based on the valid GST Registration Certificate issued to them by the tax department.

“We are committed to supporting the regulators as they complete this investigation. This matter is also currently before the High Court and sub judice," the spokesperson said.

Meanwhile, about 10-15 I-T officials had visited the offices of Swiggy, wrapping up their survey on Friday. Mint could not ascertain the name of Swiggy’s third-party vendor.

A spokesperson for Swiggy declined to comment.

Mint could not independently verify if the third-party vendor contracts of Swiggy and Flipkart are still ongoing and valid.

The survey is part of the government’s drive since mid-November against the use of fake invoices by businesses for wrongfully securing input tax credits.

The I-T department’s searches are based on information received from GST authorities. Tax officials had on Monday conducted surveys at the premises of Larsen and Toubro Ltd and Zee Entertainment Enterprises Ltd in a similar case of alleged tax evasion, Mint reported.

Subscribe to Mint Newsletters
* Enter a valid email
* Thank you for subscribing to our newsletter.

Click here to read the Mint ePaperMint is now on Telegram. Join Mint channel in your Telegram and stay updated with the latest business news.

Close
×
Edit Profile
My Reads Redeem a Gift Card Logout