The commerce ministry had earlier said e-commerce must be defined to sort the issues on FDI and taxation.
All 21 e-commerce companies named in a recent petition by a retail association would come under scrutiny of investigative agencies for possible breach of foreign investment rules.
“The Delhi high court, where the petition is being heard, has allowed four weeks for the Centre to file a counter-affidavit after we investigate all 21 companies,” Prabhsahay Kaur, one of the lawyers for the government, told Business Standard.
On December 17, the next day of hearing, the court will take up the matter of interim relief to these companies.
Six of these 21 e-commerce companies are already under an enforcement directorate (ED) probe in Bengaluru, it is learnt. The names of the companies being investigated have not been disclosed.
The petitioner, All India Footwear Manufacturers and Retailers Association (AIFMRA), had named Flipkart, Snapdeal, Myntra, Jabong, Yepme, Shopclues, Homeshop 18, Zovi, Fashion And You, Myntra, Limeroad, Fashos, Voonik, FirstCry, InfiBeam, AmericanSwan, Heel and Buckle, Fashionara, Elitify, Junglee. Darveys and Famozi as not adhering to the foreign direct investment (FDI) rules on retailing.
It had sought a blanket ban on all these, arguing that transactions conducted by online retailers, though they have opted for the marketplace route, are similar to those undertaken by any traditional retailer.
‘’Every company has to be looked at separately, we told the court,’’ Kaur said.
To that, the court has responded by giving four weeks for investigating all 21. The judge, Rajiv Sahai Endlaw, had during the course of the hearing indicated “prima facie violation” of the FDI norms, news reports said. On Thursday, he asked ED to “investigate all the other entities…and publish the information in this regard”.
Currently, FDI is not allowed in e-commerce. However, most of the companies in this segment are funded by foreign investors. While some follow the market place route, which does not prevent FDI, others are routing their funds through complex corporate structures.
The commerce ministry had earlier said e-commerce must be defined to sort the issues on FDI and taxation.
Flipkart has long been under the ED scanner for alleged violation of FDI rules.
Under Scanner
- All 21 e-commerce firm named in a recent petition would come under scrutiny for possible breach of foreign direct investment rules
- Names of the firms being investigated by ED have not been disclosed
- Currently, FDI is not allowed in e-commerce
- The commerce ministry had earlier said e-commerce must be defined to sort the issues on FDI and taxation
