Misuse of GST by Rogue Sellers on e-commerce Platform: Delhi HC directs Flipkart to take Steps to Resolve Issue [Read Order]

The Delhi High Court has directed Flipkart to investigate the issue of misuse of GST by rogue sellers on the e-commerce platform and sought its response on the steps that can be taken to ensure that the misuse does not take place on the website. A suit was filed by Zydus Healthcare Limited against Flipkart over the sale of its counterfeit hair colour products under the trademark “CUTICOLOR”. It was alleged that counterfeit hair colour products with the same mark and similar packing were being sold by unknown defendants giving identities of fake sellers on Flipkart. The defendant contended that it publishes on its website, rules and regulations, privacy policy, and user agreement which every user buyer or seller needs to accept before using the platform.

It further said as part of the agreement, there are certain warranties that are applicable to the seller that they shall not upload, post, or display products that violate any intellectual property rights or any other proprietary rights. It was argued that as per the Information Technology ( Intermediary Guidelines and Digital Media Ethics Code Rules ) 2021 since they qualify as an intermediary, they have provided an agreement mechanism for intellectual property infringement on its platforms with a take down mechanism.

It further submitted that Flipkart follow measures to prevent counterfeiting, which are taken both as proactive measures, at the time of onboarding the seller, and reactive measures, taken after receipt of complaint. Justice Anish Dayal asked Flipkart to investigate into whether different FSN numbers can be provided for different sellers of the same product, considering that the marketplace allows any seller to sell their product. Further held that Defendant no. 1 shall file a tabulation demonstrating compliance with Rules 5 and 6 of the E-commerce Rules, specifically tabulating the Rule in question and the nature of compliance which is done by them currently. To Read the full text of the Order CLICK HERE

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