Sourabh Virmani

Sourabh VirmaniEmpowered Committee of State Finance Ministers (Finance Ministry of India) have placed a draft of model GST law in the month of June 2016 for public comments and suggestion, which is proposed to be put before the parliament in the upcoming sessions. The New GST bill which is said to be a ‘forward looking’ Bill that is supposed to modernize Indian governance, apparently fails to recognize the Internet and digital economy in India. The provisions contained in the GST bill are not in consonance with the other enacted laws such as information technology act, 2000.

The new GST Bill clubs all intermediaries as ‘agents’ who carries on the business of supply or receipt of goods and/or services on behalf of another and clubs these entities together with commission agents, brokers, etc.

Section 2(85) of the model GST law provides for definition of agent as follows:

agent” means a person who carries on the business of supply or receipt of goods and/or services on behalf of another, whether disclosed or not and includes a factor, broker, commission agent, arhatia, del credere agent, intermediary or an auctioneer or any other mercantile agent, by whatever name called, and whether of the same description as hereinbefore mentioned or not.

Also the provisions under Section 79 of the Information Technology Act, 2000:

“No person providing any service as a network service provider shall be liable under this Act, rules or regulations made thereunder for any third party information or data made available by him.”

The explanation to the section provides that a network service provider means an intermediary.

In simple words, this means that services that host third party content- Facebook, Twitter, LinkedIn, Zomato and so on- are not liable for the contents uploaded or posted by users under the said provision.

However, according to the Bill, these websites and platforms are identified as agents acting on behalf of users and hence will be liable for all videos hosted on its platform.

The provisions for intermediaries in the New GST Bill are in clear contradiction with the provisions for ‘digital intermediaries’ as recognized by the IT Act, 2000

Therefore, the government should address the inconsistency by reinstating the definitions provided under the law to avoid such contradictory views.

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February 2024