Amazon gets friendly pings from 'Naidu.com'

AP offers land adjacent to Karnataka border off Kolar

After Google’s reported move to shift its South India centre from Bengaluru to Hyderabad, it could well be the turn of online retailer Amazon India next.

The spat between Amazon and Karnataka’s commercial tax department has queered the pitch for Andhra Pradesh’s go-getting Chief Minister N Chandrababu Naidu to step in with an offer which the American e-commerce giant will find difficult to refuse.

According to sources familiar with the development, Andhra Pradesh Chief Minister N Chandrababu Naidu has offered land adjacent to the Karnataka border in proximity to Kolar district where the company can operate all its logistical services with all tax holidays and without the attendant headaches.

Amazon India came under the Karnataka tax net a few months back when the commercial taxes department claimed that the company was not paying value-added tax (VAT) on online transactions. The global retailer claimed that it is not doing business directly and asked the department to collect VAT from its sellers.

However, the department has argued that since Amazon is acting more as a facilitator or logistics provider for goods booked and sold on its platform it will have to pay up VAT on goods sold.

The Karnataka tax authorities had gone ahead with their plans to attach the assets of Amazon dealers who haven’t responded to the commercial tax department’s notice to cancel their licences.

According to sources privy to the development, the tax department is ready to extend the deadline and will go ahead once the chief minister takes a stand on this issue.

An Amazon spokesperson said on Monday that the company would not comment on its future course of action. Amazon CEO Jeff Bezos had during his recent visit announced that the company will invest $2 billion in India’s e-retail space.

Commenting on the development, FKCCI president Sampathraman supported the Karnataka government’s stand.

“The chief minister and the Commercial Taxes Department are right because Amazon will have to comply with state laws. But the government is trying to redress the grievances of Amazon,” he said.

As per a recent Assocham-PwC study, about 40 million consumers purchased something online this year and the number is expected to grow to 65 million by 2015 with better infrastructure in terms of logistics, broadband and Internet-ready devices.

The overall e-commerce industry, valued at $17 billion (roughly Rs 1,08,167 crore), is expected to cross the $100 billion (roughly Rs 6,36,281 crore) in five years, says the study report.