E-commerce is a relatively new concept in India and as such various aspects related to it are still developing. One such aspect is legal issues associated with e-commerce in India especially with conflict of laws issues. E-commerce laws in India are still maturing as we have basic level legal framework regarding e-commerce in India as incorporated in the Information Technology Act, 2000 (IT Act 2000). However, there is no clarity regarding legal or illegal usage of e-commerce platforms in India as on date.
Recently, the Indian government clarified about the Foreign Direct Investment (FDI) in E-Commerce Sector of India. But FDI and taxation related violations are still happening in India as Indian government has not taken a firm stand in this regard. A software for calculating e-commerce exports was also developed by Indian government. Nevertheless, legal violations by big e-commerce platforms of India still continues especially for online pharmacies, telemedicine, online gambling, e-health, m-health, internet of things (IoT), etc. E-commerce disputes resolution is another area that requires urgent attention of Indian government. Technology driven initiatives like e-courts and online dispute resolution (ODR) must be encouraged by Indian government for resolution of e-commerce disputes in India.
Now it has been reported that Amazon and 50 of its sellers are facing investigations for allegedly falsely claiming Central Value Added Tax (Cenvat) credit and evading tax of about Rs 118 crore. Aggregators such as Amazon pay service tax to the seller. Some sellers had not deposited the service tax with the government even after claiming it from the e-commerce giant. The Directorate General of Central Excise Intelligence (DGCEI) is investigating the matter. Traders are alleged to have misused the Cenvat scheme, which allows a manufacturer or service provider a relief from the taxes paid on inputs to manufacturing of final products or services. DGCEI had detected that bogus invoices of declared goods were issued to merchants through dummy firms. Verifications revealed that the firms said to be providing the goods were non-existent.
Officers of the DGCEI have conducted search operations at Amazon's business premises across the country and at its headquarters in Bengaluru, in January. "So far, the total tax evasion we have been able to establish is to the tune of Rs 118 crore, which could increase. We will soon issue show cause notices to respective sellers," a senior officer said. "We have recorded the statement of Amazon executives and are assessing the details provided by them," he added. Amazon India has confirmed that the DGCEI had raised some questions around their promotion programme. Amazon has cooperated with the authorities to the fullest extent and provided them with all the information that they needed. The DGCEI is also probing if Amazon had any involvement in the merchants claiming Cenvat credit.