Walmart-owned Flipkart suffered a setback after the West Bengal Appellate Authority for Advance Ruling (WBAAAR) reportedly struck down a proposed structure that sought GST exemption on delivery charges collected from customers.

The ruling could have wider implications for ecommerce and quick commerce platforms that have been exploring similar models to reduce the tax burden on delivery fees, a key cost component for such businesses.

According to an ET report, Flipkart had proposed a structure under which it would classify itself as a goods transport agency (GTA) while handling deliveries from a “source mother hub” to customers’ doorsteps. 

Under the model, the company planned to issue documents similar to consignment notes and separately charge customers a goods transport fee.

The ecommerce major argued that since GTA services provided to unregistered individuals are exempt from GST under existing rules, no GST should apply on these delivery charges.

In December 2025, the WBAAR accepted Flipkart’s argument and ruled that the arrangement qualified as a GTA service. However, the state tax department challenged the decision before the appellate authority.

On May 6, the WBAAAR overturned the earlier ruling, calling the arrangement a “mere legal fiction created through contractual structuring” instead of a genuine GTA transaction.

The authority said customers visit Flipkart’s platform to buy products with doorstep delivery and not to independently hire a transporter. It noted that customers neither choose the transporter nor negotiate freight rates or routes.

The appellate body also questioned whether last-mile deliveries using two-wheelers and electric three-wheelers qualify as transportation through a “goods carriage” under the Motor Vehicles Act, which is a requirement for GTA classification.

According to the order, Flipkart’s operations involve sorting, hub-based handling, transshipment, tracking and doorstep delivery, which are more in line with organised courier and ecommerce logistics services than conventional GTA operations. As a result, the authority held that GST at 18% would apply on such services.

The ruling comes at a time when delivery charges and their GST treatment have come under increasing scrutiny across food delivery, ecommerce and quick commerce platforms.

Last year, the GST Council decided to impose 18% GST on delivery fees charged by platforms such as Swiggy, Zomato and Blinkit under Section 9(5) of the CGST Act. The move brought local delivery services offered through ecommerce operators directly under the tax net and closed what authorities saw as a gap in GST treatment.

Before the change, delivery charges were largely treated as pass-through costs and kept outside GST. The revised framework increased delivery costs for consumers and also gave tax authorities stronger backing in ongoing disputes over GST applicability on delivery fees.

Food delivery and quick commerce platforms have already faced multiple tax notices in recent years. In December 2024, Zomato received a GST demand notice of around ₹803 Cr from Maharashtra authorities over delivery charges collected between October 2019 and March 2022. 

Separately, the Directorate General of GST Intelligence (DGGI) issued a notice to Swiggy in September 2024 over alleged unpaid GST liabilities linked to delivery fees.

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