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Legal And Regulatory Framework Of E-Commerce Platforms In India

In the changing scenario of world Business, the new marketplace 'E - Commerce' has been evolved to facilitate the people. E-commerce is a revolutionary business idea that has had a big impact on the economy and the life of the people. E-commerce is an online-based business strategy that was created to provide customers access to a marketplace which allowed them to purchase and sell goods and services.

As a consequence, e-commerce often runs on a variety of electronic services such as internet, electronic money transfer, electronic data interchange, etc Due to the increased customer choice and convenience of conducting business over the internet, where a vendor or merchant can sell their goods or services directly to the customer and receive payment via an electronic funds transfer system using a debit card, credit card, or other payment method, e-commerce has quickly gained popularity and acceptance around the world.

The E-Commerce market, and it's holding in all trade and commercial transactions, is growing in demand and developing extremely quickly, displacing non-ecommerce transactions in a wide range of industries as a result of this comfort and simplicity of doing business. In every aspect of company and consumer services, e-commerce is already present.

The Indian e-commerce industry has grown at a remarkable rate in recent years, but there are still several significant obstacles to overcome. Long-term performance of large Indian market enterprises depends on their ability to adapt to shifting conditions. While some companies seized the opportunity and established an internet presence, a large number were able to properly keep up with the changes and eventually went out of business as a result of intense competition.

The regulations that regulate its operation to maintain checks and balances have to be oriented as a significant portion of products and services in India are obtained through electronic methods in an online environment.

Meaning and definition of E-Commerce:
The term 'electronic commerce' generally refers to contracts and payments made using computers and other electronic equipment. 1 As commonly used, the phrase encompasses agreements concluded through the exchange of email, purchases made at internet websites, transfers of money made by electronic means, and other similar activities. The term further includes both business-to-business and business-to-consumer transactions.

There is no universally accepted definition of e-commerce. Yet various definitions have been drawn by different organizations. Few of such definition of e-commerce are as below: Department for Promotion of Industry and Internal Trade (DPIIT), FDI Policy, 2017:

E - Commerce means buying and selling of goods and services, including digital products over digital and electronic network.

Ministry of Electronics and Information Technology (MeitY):
"E - Commerce is a type of business model, or segment of a larger business model, that enables a firm or individual to conduct business over an electronic network, typically the internet. Electronic commerce operates in all four of the major market segments: business to business, business to consumer, consumer to consumer and consumer to business."

Consumer Protection Act, 2019:
E-Commerce means "buying or selling of goods or services including digital products over digital or electronic network."

Central GST Act, 2017:
"Electronic commerce" means the supply of goods or services or both, including digital products over digital or electronic network.

World Trade Organisation (WTO):
The term "electronic commerce" is understood to mean the production, distribution, marketing, sale or delivery of goods and services by electronic means. (Work Programme on Electronic Commerce, 1998)

Legal and regulatory framework of E-Commerce platforms in India:
There is no specific legislation governing e-commerce, there are several rules and regulations that apply to different e-commerce value areas. Although there are no specific e-commerce regulations in India as far as the regulatory framework controlling e-commerce activity is concerned. The Indian government's several ministries and departments deal with various aspects of e-commerce.

For example, the ministry of Electronics and Information Technology is responsible for the technical elements of e-commerce, including data confidentiality, under the information technology Act. Consumer protection concerns are handled by the Department of Consumer Affairs. E-commerce-related issues involving foreign investment are handled by the Department for the Promotion of Industry and Internal Trade. The WTO's e-commerce negotiations are handled by the Department of Commerce. [1]

Indian Contract Act, 1872:
E-contracts, which are really standard form agreements covered by the Indian Contract Act of 1872, are created during e-commerce transactions. The only necessary condition for validating an electronic contract in compliance with the prerequisites set forth in Section 10 of the Indian Contract Act, 1872. Therefore, in order for e-commerce contracts to be effective, they must:
  1. Be entered into with the parties' free permission and
  2. Have a legal consideration.

The Contract Act regulates the requirements for the legality of contracts created by electronic means, the exchange and acceptance of offers, as well as the cancellation of contracts and the formulation of agreements between buyers, sellers, and intermediaries. All the above mentioned aspects are covered by the provisions of Indian Contract Act. Any online platform's terms of service, privacy policy, and return policies must also be made sure to be enforceable by law.[2]

Sales of Goods Act, 1930:
Since people did not frequently enter into e-contracts, the Sale of Goods Act, 1930 was only designed for conventional business transactions prior to the rise of e-commerce. However, in light of the recent rapid expansion in virtual business transactions for goods & services, the act is now being implemented to ensure legal compliance.

The sections relevant to contract performance must be investigated in order to demonstrate the connection between the execution of E-Contracts and the laws governing the sale of goods. Sections 31 to 44 of the Sale of Goods Act, 1930's Chapter IV, titled "Performance of the Contract," are concerned. The vendor and the customer must fulfil specific requirements on the e-commerce platform before performing the contract in order for it to be considered a genuine e-contract.[3]

Information Technology Act:
The IT Act contains a variety of laws that serve as guidelines for e-commerce operations. The Central Government is required by Section 84A of the IT Act to promote e-governance and e-commerce. It must also guarantee the safe usage of electrical devices. Section 43A of the IT Act contains provisions relating to data protection.

According to Section 66A of the IT Act, anyone found using another person's identity dishonestly would be subject to a fine of INR 1,000,000 or up to 2 years in prison, or both, depending on the gravity of the offence. The Information Technology (Reasonable Security Practices and Procedures and Sensitive Personal Data or Information) Rules, 2011, apply to e-commerce firms.

The 2011 Intermediary Rules, which are governed by the IT Act, will apply to intermediary websites and the material they show. In collaboration with the Ministry of Information and Broadcasting, the Ministry of Electronics and Information Technology (MeitY) published the Information Technology (Guidelines for Intermediaries and Digital Media Ethics Code) Rules, 2021 on February 25, 2021.

The Rules have been released in accordance with the government's authority to make rules under Section 87 of the IT Act, and they comprise regulations relating to the standards that intermediaries must adhere to and the banning of access to material under the IT Act.[4] India incorporated Information Technology (Amendment) Act, 2008 to give implementation of the UNCITRAL Model Law on Electronic Signatures, 2001 in India. The IT Act of 2000 was amended to make it technology‚Äźneutral and recognized electronic signatures over restrictive digital signatures.

Companies Act, 2013:
An e-commerce entity shall be a company under CA act, 1956 or 2013 or a Foreign Company under CA, 2013 or an office branch or agency outside India owned or controlled by a person resident in India as provided under FEMA, 1999.

Payment and Settlements Systems Act, 2007:
A "payment system" is defined under the law as a mechanism that permits payment to take place between a payer and a beneficiary. Additionally including a stock exchange but excluding a clearing, payment, or settlement service. By adhering to the pertinent guidelines set by the RBI on online payments, an e-commerce firm must be eligible to function as a payment system. Furthermore, a Nodal Account must be operational for the purpose of settling the payments of the merchants on an intermediary's online e-commerce platform in order for that intermediary to receive payments via electronic means.[5]

Central Good and Services Act, 2017:
According to Section 24(x) of the CGST Act, 2017, e-commerce operators are not eligible for the threshold exemption and must register regardless of the value of the supplies they make. According to Section 24(ix) of the CGST Act, 2017, these individuals are not eligible for the threshold exemption and must register regardless of the value of the supply they made.

The supply must, however, be made through an electronic commerce operator that 1is obligated to collect tax at source pursuant to Section 52 of the CGST Act of 2017. Only then is this obligation relevant. However, when an announcement made according to Section 9 (5) of the GST Act requires the e-commerce operators to pay tax on the suppliers' behalf.[6]

Consumer protection Act, 2019:
To address particular problems that have emerged in this age of digitization and e-commerce, the CPA 2019 made major amendments to the consumer protection legislation from 1986. The E-Commerce Rules offer a framework to control online advertising, product sales, and customer purchases.

Every e-commerce business is required by this Act to offer customers the data they need to make informed pre-purchase decisions, such as information on return, refund, exchange, warranty and guarantee, delivery and shipment, modes of payment, grievance redressal mechanism, payment methods, security of payment methods, charge-back options, etc.[7] The Consumer Protection (E-Commerce) Rules, 2020 apply to:
  1. all goods and services (including digital products) transacted over an electronic/digital network;
  2. all models of e-commerce, including marketplace and inventory models;
  3. all e-commerce retail (including multi-brand and single brand retail trading); and
  4. all forms of unfair trade practices across all e-commerce models.

Conclusion:
In order to reinforce the legal framework that is essential to the development of e-commerce in India, there is a pressing need for dynamic and effective regulatory systems. It has long been said that India's lax cyber security regulations and lack of an effective regulatory framework for e-commerce are to blame for the numerous obstacles that both Indians and the e-commerce sector confront in achieving a consumer and business-friendly e-commerce environment. Other than the IT Act, which governs e-commerce activities and transactions in India, there is no specific legislation that controls e-commerce in that country.

As a result, the government should create a legislative framework for e-commerce to ensure that both local and foreign trade in India flourishes and that fundamental right like privacy, intellectual property, fraud prevention, consumer protection, etc. are all respected. In order for the rapidly expanding business module to be able to conform to the current laws typically applied to commercial transactions in traditional modules, the legal community in India has to have the appropriate experience to educate entrepreneurs, customers, and even judges.

Bibliography:
  1. https://agamalaw.in/2022/01/31/e-commerce-sector-in-india-an-overview-of-legal-framework/
  2. https://www.lexology.com/library/detail.aspx?g=6c3e377f-e607-4fa2-869b-54f9731ecdb6
  3. E-commerce Laws and Regulations in India: Issues and Challenges By Aijaj Ahmad Raj and Wazida Rahman
  4. https://blog.ipleaders.in/ecommerce-law/
  5. Law Relating To E-Commerce: International And National Scenario With Special Reference To India by Dr. Jyoti Rattan
  6. https://www.icsi.edu/media/webmodules/E-Commerce_LegalPerspective.pdf
  7. https://scholarship.law.gwu.edu/cgi/viewcontent.cgi?article=1820&context=faculty_publications
  8. https://www.bigcommerce.com/blog/online-business-laws/
  9. Regulating E-Commerce in India A Work in Progress by Ankit Singh
  10.  https://forms.iimk.ac.in/libportal/ebook/EB8.pdf
  11. https://www.nishithdesai.com/fileadmin/user_upload/pdfs/Research%20Papers/E-Commerce_in_India.pdf
End-Notes:
  1. Aijaj Ahmed Raj and Wazida Rahman, "E-commerce Laws and Regulations in India: Issues and Challenges" published in Research gate, 2016)
  2. Sanjana Buch, "E-Commerce Sector in India - An Overview of Legal Framework" (published in Mondaq.com)
  3. Paras Gupta and neha Sharma, India's E-Commerce Rise: "Performance of E-Contracts under Sale of Goods Act, 1930" ISSN 2581-5369 (2022)
  4. Ankit Singh "Regulating E-Commerce in India A Work in Progress" ISSN: 2581-5369 (2019)
  5. https://vakilsearch.com/advice/e-commerce-laws-and-regulations-in-india/
  6. CGST Act, 2017
  7. https://www.moneycontrol.com/news/economy/policy/consumer-protection-act-2019-comes-into-force-e-commerce-platforms-to-face-the-heat-for-unfair-practices-5572851.html

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