A cyberspace and InformationTechnology

Cyberspace can be de ned as an intricate environment that involves interactions between people,
software, and services. It is maintained by the worldwide distribution of information and
communication technology devices and networks.
With the bene ts carried by the technological advancements, the cyberspace today has become a
common pool used by citizens, businesses, critical information infrastructure, military and
governments in a fashion that makes it hard to induce clear boundaries among these di erent groups.
The cyberspace is anticipated to become even more complex in the upcoming years, with the increase
in networks and devices connected to it.
Cybersecurity denotes the technologies and procedures intended to safeguard computers, networks,
and data from unlawful admittance, weaknesses, and attacks transported through the Internet by
cyber delinquents.

ISO 27001 (ISO27001) is the international Cybersecurity Standard that delivers a model for
creating, applying, functioning, monitoring, reviewing, preserving, and improving an Information
Security Management System.
The Ministry of Communication and Information Technology under the government of India
provides a strategy outline called the National Cybersecurity Policy. The purpose of this
government body is to protect the public and private infrastructure from cyber-attacks.

1B
regulation of cyber space
Cybersecurity Policy
The cybersecurity policy is a developing mission that caters to the entire eld of Information and
Communication Technology (ICT) users and providers. It includes −
Home users
Small, medium, and large Enterprises
Government and non-government entities
It serves as an authority framework that de nes and guides the activities associated with the security
of cyberspace. It allows all sectors and organizations in designing suitable cybersecurity policies to
meet their requirements. The policy provides an outline to e ectively protect information, information
systems and networks.
Cyber Crime
The Information Technology Act 2000 or any legislation in the Country does not describe or
mention the term Cyber Crime. It can be globally considered as the gloomier face of technology.
The only di erence between a traditional crime and a cyber-crime is that the cyber-crime
involves in a crime related to computers.
 Traditional Theft − A thief breaks into Ram’s house and steals an object kept in the house.

Hacking − A Cyber Criminal/Hacker sitting in his own house, through his computer, hacks the
computer of Ram and steals the data saved in Ram’s computer without physically touching the
computer or entering in Ram’s house.

The I.T. Act, 2000 de nes the terms −

access in computer network in section 2(a)
computer in section 2(i)
computer network in section (2j)
data in section 2(0)
information in section 2(v).
The object of o ence or target in a cyber-crime are either the computer or the data stored in the
computer.
Nature of Threat
Among the most serious challenges of the 21st century are the prevailing and possible threats in the
sphere of cybersecurity. Threats originate from all kinds of sources, and mark themselves in disruptive
activities that target individuals, businesses, national infrastructures, and governments alike. The
e ects of these threats transmit signi cant risk for the following −
public safety
security of nations
stability of the globally linked international community
Malicious use of information technology can easily be concealed. It is di cult to determine the origin
or the identity of the criminal. Even the motivation for the disruption is not an easy task to nd out.
Criminals of these activities can only be worked out from the target, the e ect, or other circumstantial
evidence. Threat actors can operate with considerable freedom from virtually anywhere. The motives
for disruption can be anything such as −
simply demonstrating technical prowess
theft of money or information
extension of state con ict, etc.
Criminals, terrorists, and sometimes the State themselves act as the source of these threats. Criminals
and hackers use di erent kinds of malicious tools and approaches. With the criminal activities taking
new shapes every day, the possibility for harmful actions propagates.
 Mission and Vision Cybersecurity Program
Mission
The following mission caters to cybersecurity −

To safeguard information and information infrastructure in cyberspace.

To build capabilities to prevent and respond to cyber threats.
To reduce vulnerabilities and minimize damage from cyber incidents through a combination of
institutional structures, people, processes, technology, and cooperation.
Vision
To build a secure and resilient cyberspace for citizens, businesses, and Government.

Information Technology Act

The Government of India enacted The Information Technology Act with some major objectives
which are as follows −

To deliver lawful recognition for transactions through electronic data interchange (EDI) and
other means of electronic communication, commonly referred to as electronic commerce or
E-Commerce. The aim was to use replacements of paper-based methods of communication
and storage of information.
To facilitate electronic ling of documents with the Government agencies and further to
amend the Indian Penal Code, the Indian Evidence Act, 1872, the Bankers' Books Evidence
Act, 1891 and the Reserve Bank of India Act, 1934 and for matters connected therewith or
incidental thereto.
The Information Technology Act, 2000, was thus passed as the Act No.21 of 2000. The I. T.
Act got the President’s assent on June 9, 2000 and it was made e ective from October 17,
2000. By adopting this Cyber Legislation, India became the 12th nation in the world to adopt
a Cyber Law regime.

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 Space Issues and
Regulation of cyber
challenges
Today cyber space has become an inseparable element of our life but if we see two decades ago
this term seemed like science ction. Cyberspace is the virtual space or imaginary space created
by internet and it does not have any geographical boundaries/areas.

Internet V S cyberspace
Internet is the global computer network which gives information as well as communication facilities
through interconnected networks with the help of standardized communication protocols4. Whereas,
cyberspace is the virtual space or imaginary space created by internet, which works on the notional
environment of the computer network and it does not have any geographical boundaries/areas. In
simple words we can say that internet is the set of computer network that works using di erent
communication protocols and cyberspace is the virtual place or world of computer which works
because of the internet.

Cyber Security Issues and Challenges

The Indian government has been on the aim to digitize the country and during this process many
enterprises have also moved forward to with the aim to digitize their business operations and
processes. All of these technological advancement has indeed helped the organizations to bring
their business to new heights and achievement but this has also lead to the exposure of critical
data and theft of intellectual property. This threat to cyber security can range from cyber-attacks
on critical infrastructure to new and di erent forms of misuse of social media. Various kinds of
cyber threats have plagued India since years.[6]
Cybercrimes can be said to be crimes that dealt with computers and networks speci cally. Some
of the common cybercrimes are as follows:

.Child Pornography: Paedophiles (an individual who is physically drawn to kids) bait the kids by
conveying explicit material and then seek after them for sexual exploitations.
Credit card Frauds: it is theft of the information of cardholder facing the payment issue.
Cyber Stalking: it is the use of internet services for harassing or threating a victim. Internet, emails
or other communication devices are used to stalk someone.
Data Diddling: in this just before the raw data is processed by a computer it is altered and then
changed back after it is completed.
Distribution of Malicious Software: in this a software is designed which is to perform unwanted illegal act
through computer network.
Hacking: an unlawful interruption into a computer framework and system.
Identity fraud: it is the use of someone else’s identity for illicit purpose.
Mail Bombs: it refers to the sending of countless E-Mails to the victim so as to crash the victim’s Email
account or an E-Mail service provider.
Password Sni ng: Password Sni ers are programs that screen and record the name and secret key of
organization clients as they login, threatening security at a site

Regulation of Information and Communication Technologies

There has always been a challenging and complex regulatory environment in India. At the
national level, regulations and various promotion schemes are frequently announced. New bills
and guidelines have been announced that have impact on privacy, data protection, cross-border
data ows etc. and India recently announced new bills and guidelines impacting data protection,
privacy, cross-border data ows, and data localization. The GOI has introduced the: –

Information Technology (Intermediary Guidelines and Digital Media Ethics Code) Rules in 2021,
Draft of Personal Data Protection Bill (PDPB),
Non-Personal Data Governance Framework,
National Cyber Security Strategy in 2020 (NCSS 2020) etc.
India has introduced a digital tax. This tax is called Equalisation Levy, which is at the rate of 2%
of the amount of the consideration received or which is receivable by an E-commerce operator
from the supply of goods or services. This was introduced in March 2021, and it became
e ective on April,2021.[8]

The current laws that govern the Information and Communication Technology, they have been
derived
. from di erent Acts. These Acts include-

Indian Telegraph Act 1885

Indian Wireless Telegraphy Act 1933
The Telegraph Wire Unlawful Possession Act 1950 and
The Cable Television Network (Regulation) Act 1995
The Information Technology Act 2000 covers all the issues relating to data security, cyber-crime,
digital signatures, electronic commerce etc. and this Act also governs cyber space. Further this
act grants legal sanction to the e-commerce transactions and prohibits the breach of privacy and
con dentiality. The issues relating to electronic transactions, hacking, network service providers
and digital signatures are also covered by the Act. It tries to resolve matters/issues relating to
cyber jurisdiction. This Act also applies to the o ences and the contraventions that have been
committed outside India by any person regardless of his nationality.

But it is to be noted that the Act is silent on the issue of access and the sharing of personal
information, which comes under the protection of data privacy laws in many countries. In the
present Act there are no speci c provisions relating to data privacy of the individuals

It is very possible that in the near future, with the advancement of technologies, there might arise
situations where the circumstances and transactions mentioned in the IT act 2000 may not be
able to provide adequate protection and remedy to the individuals and the companies that are
carrying on their business relating to personal data.

At the end the parties will be left with the choice to enter into data privacy agreements. All of this
a ects the outsourcing/BPO companies that are from America and Europe, and where they have
laws which provide protection to personal data.[9]

'Ways to strengthen the IT Act

The Amendment Act of 2008 had reduced the amount of punishment for the majority of the
cybercrimes and this issue needs to be resolved immediately.
The Act should make majority of the cyber-crimes non-bailable.
Another issue is that the Act doesn’t covers the o ences committed through mobiles, which
again needs to be resolved.
The Act needs to incorporate in the law a comprehensive data protection regime as it will make
the Act more e ective.
Lastly, the Act must include cyber war under the category of o ence[11].
 UNCITRAL MODEL LAW ON E COMMERCE

The United Nations Commission on International Trade Law (UNCITRAL), by the means of Model
Law on Electronic Commerce (MLEC), sought to provide a set of internationally acceptable rules
with an aim to remove legal obstacles and increase legal predictability for e-commerce. It has
further improved the e ciency in international trade by providing equal treatment to paper based
and electronic information, thus enabling the use of paperless communication.

The model law is not a comprehensive, code-like articulation of the rules for the electronic
transactions. It does not intend to govern every aspect of electronic contracting. It adopts a limited
framework approach and enables and facilitates e-commerce. It has adopted the following
fundamental principles of the modern electronic-commerce law:

The principle of non-discrimination – It ensures that any document would not be denied legal
validity, e ect, and enforceability solely on the basis that it is in electronic form.
The principle of technological neutrality – It mandates the adoption of such provisions which are
neutral with respect to technology used. This aims at accommodating any future developments
without any further legislative work.
The functional equivalence principle – It sets out the speci c requirements that e-communication
ought to meet in order to ful ll the same functions that certain notions ,in traditional paper based
system, seek to achieve, for example, “writing”, “original”, “signed”, and “record”.
All the states have given favourable consideration to the model law while enacting or revising their
laws so that uniformity of the law applicable to the alternatives to the paper-based methods of
communication is facilitated. This article deals with a brief history and key provisions of the Model
Law of E-commerce to better understand the objectives of MLEC and how they are achieved.

The Model Law has been divided into two parts. The Part I relates to the general provisions relating
to e-commerce, it legislates the three principles of non-discrimination, technological neutrality, and
functional equivalence. Besides establishing uniformity in the laws regarding e-commerce and legal
relevance for data communicated through electronic mode, MLEC also establishes rules for
formation and validity of e-contracts, for data message attribution, for receipt acknowledgement and
for determining receipt of data messages, etc.

The Part II of the Model Law deals with speci c provisions for e-commerce in certain areas.

and
 and Judicial Interpretatio
Implementation
across the
globe
The Model Law of Electronic Commerce was adopted to facilitate the international trade through
electronic modes of communication. It aimed at encouraging national legislators to adopt a set of
internationally acceptable rules regulating e-commerce. Thus, Model Law is accompanied with a
guide which provides background and explanatory information to assist the states in preparing the
necessary legislative provisions.

Di erent states enacted laws based on the principles of this Model Law. Thus, the courts have
interpreted the provisions of their domestic laws according to the Model Law.

Khoury v. Tomlinson is a landmark case decided by the Texas Court of Appeal. The facts of this case
are such that an agreement was entered via e-mail which was not signed but only the name of the
originator appeared in the ‘from’ section. Referring to the principles in Article 7 of the Model Law, the
court found su cient evidence that the name in the ‘from’ section establishes the identity of the
sender.

Chwee Kin Keong and others is a case dealt with by the Singapore High Court. There was the issue of
unilateral mistake in this case as the wrong price was quoted on the seller’s website for a product. The
server of the seller automatically sent a con rmation mail when the buyers placed an order. All the
elements of the contract were established but with a mistake which eliminated consensus ad idem.
Referring to the Singapore Electronic Transactions Act based on Model Laws, the court found that
human errors, system errors, and transmission errors could vitiate a contract.
 Law and e
cyber governance
b
Cyber law deals with the legal aspects of cyberspace, the internet, and computing. In a broader view,
cyber law handles the issues of intellectual property, contract, jurisdiction, data protection laws,

Cyber Law in India: A Brief Understanding

Statistically, over 44,000 cybercrimes happen in India every year, and Karnataka leads the list of states
with high cybercrime rates. As per the 2020 Statista report on the average cost of data breaches
worldwide 2020, India faced a cost of USD two million for crimes related to a data breach. Elaborate
statistics can be read here.
Cyber law in India is treated in both the Indian Penal Code and the Information Technology Act, 2000.
Following are a few of the various cyber crimes dealt with by Indian cyber laws.
In India, the de nition of cyber law is divided into two aspects, hacking systems and using the same to
commit crimes of varying degrees. Furthermore, the Indian cyber law is an integrated space of arenas
including intellectual property rights, privacy rights, and more.
Cyber law in India deals with the following in general. It is to be noted that this is an inclusive list
and not an exhaustive one. The same concepts can be dealt with in other jurisdictions around
the globe.
Following are the types of cybercrimes and the types of cyber law protections.
Fraud
Cyber law in India identi es the theft of identity, credit cards, and other nance-based crimes as
fraud; these cybercrime o enses may lead to nes, imprisonment, or both.
Fraud
Copyright
Cyber law in India protects copyrighted works present in online forums. The accused are
punished based on the Copyright Act and other applicable acts, rules, and regulations.
Copyright
Defamation
The Indian constitution ensures the right to speech, but it comes with limitations; when the
limitations are crossed, it constitutes defamation. A person who defames another person or an
organization will be punished under cyber law.

But, What constitutes defamation activity online? In brief, according to cyber law, spreading
false information or information without evidence online constitutes defamation activity.
Indeed, with the growth of social media usage, stronger cyber law protection is required against
defamation.
Defamation
Harassment and stalking
Cyber law in India protects online users from harassment and stalking. When someone speaks in a
targeted way against you online, it would constitute harassment. The factors of harassment are
circumstantial.
When online information is used to harass someone, it is known as stalking.
Harassment and stalking are serious o enses in India that have repercussions in both civil law and
criminal law.
Harassment and Stalking
Trade secrets
In general, trade secrets are con dential information of companies. Attempting to leak con dential
information to the public or using the same for monetary gain is a serious o ense as per Indian cyber
law. The penalty for leaking or using trade secrets is as per the gravity of injury experienced by the
infringed party. It would be right to say that there is a need for cyber law to protect trade secrets

Objectives of Cyber Law

Lawmakers have executed cyber law legal protections with the following objectives. The following
features of cyber law are making the internet a much safer place to explore.
To be a safety net against online data predators.
To ensure justice for cybercrime victims
To prevent debit card or credit card fraud. Many people have switched to digital paying methods.
Cyber law tries to make sure that victims do not have to go through the additional agony of long
procedures.
To block transactions when there is any unusual activity such as the input of an incorrect password.
To ensure the safety of protected data. By knowing what cyber law is, one can easily adopt
preventative measures.
To ensure national security.
P V Union India
Shalya Singhal of
Facts in Issue

The petitioner led a writ petition in the public interest under Article 32 of the Indian Constitution,
seeking the Supreme Court of India to declare Section 66A, 69A and 79 of the IT Act ultra-vires to the
Constitution of India. It was asserted in the petition that the wordings of these provisions are wide and
ambiguous. The petitioner further a rmed that the objective of these provisions are inclined towards its
reckless exploitation and thus falls out of the purview of Article 14, 19(1)(a) and 21 of the Indian
Constitution. There are terminologies like menacing, o ensive, annoyance, inconvenience, obstruction,
danger, and insult which are not explained in any act. Thus, it makes it more prone to unwanted abuse.
Apart from it, the classi cation made between the citizens and netizens of the country was also termed
as arbitrary and contrary to the provision of free speech inscribed under Article 19(1) (a) of the Indian
Constitution. It was asserted that the distinction gives an authority to the police o cers to apprehend
netizens for their remarks which can also be made by the general citizens of the country. Thus, such
classi cation violates the fundamental right to equality penned down under Article 14 of the Indian
Constitution.
Constitutionality of Section 66A of The Information Technology Act, 2000

In the context of information, there are three vital ingredients to comprehend the liberty of free
speech and expression. The rst is the discussion of the cause; the second is the advocacy of its
factual existence and third is provocation among people. The heart of Article 19(1) (a) of the Indian
Constitution can be determined over the discussion & advocacy of any speci c fact and opinion. It
is only when such expressions provoke a certain section of people; Article 19(2) of the Indian
Constitution gets initiated.

Any legislation enacted to restrict the freedom of speech and expression can cause public turmoil
and a ects the autonomy & integrity of the country. But, there are certain situations in which it is
necessary to curtail the freedom of speech and expression in order to prevail public harmony in the
society. However, such an imposition of restriction on the fundamental right of speech and
expression has to be rational and intra-vires. Hence, in order to determine this; article 19(2) of the
Indian Constitution has been included to give eight essential conditions for the reasonable
classi cation of any restriction imposed upon the ‘right to speech’, which has not been satis ed by
the section 66A of the IT Act.
Liberty to Speech And Expression

The liberty to speech and expression is assured by the Preamble of the Indian Constitution and is
deemed to be of utmost importance in a democratic country. The fundamental right of free speech
and expression is also embedded under Article 19 of the Indian Constitution which gives liberty to
every citizen of this country to hold opinions and views. This was further a rmed in the landmark
case of Maneka Gandhi v. Union of India. In this case, the Apex Court of India held that there are
no territorial restrictions on the liberty to express & hold opinions and it is equally applicable in
foreign territories as well. After that, in the case of Romesh Thappar v. State of Madras, the Apex
Court of India further interpreted the scope of Article 19 and rightly pronounced that the
fundamental right of speech and expression also encompasses freedom of media to express views
and opinions as well. In fact, the liberty to hold opinions by the media houses is considered to be
of supreme importance among all the liberties provided by the Indian Constitution because it is
necessary for the proper functioning of democratic institutions. The same was pronounced in the
case of Bennett Coleman vs. Union of India. However, the scope of Article 19 was still opined to
have certain ambiguities in it, which hadn’t been dissipated. The rising issue of endless
transmission of false and malicious one-sided information by the members of the society was a
prime example of it. As a result, the Apex Court of India took cognizance of this escalating
problem and put an end to it in the case of Union of India v. Association for Democratic Reforms
and Anr. In this case, it was held that the prejudiced transmission of information, red herrings and
non-information leads to a misinformed nation which is a threat to democracy. At last, in the case
of S. Khushboo vs. Kanniamal and Anr, the fate of Article 19 was decided as the Supreme Court of
India asserted that the liberty to speech and expression is conditional but it is very vital in nature
as we are required to bear unpopular views and opinions of the society. Therefore, it can be
ascertained that the fundamental right of free speech and expression signi es a free ow of
opinions and perceived as an indispensable right to sustain a collective life. In other words, one
can say that tradition of social discourse, by and large, is of great communal signi cance.
Section 66A – An Ambiguous Provision

The terminologies used in Section 66A of the IT Act are deemed to be very ambiguous and loose in
nature. It is so vague that it is very hard to put up a charge on an accused under this section
distinctly. The executive authority is also not capable to comprehend the basis for bifurcating a
particular speech or expression falling under the purview of this provision. For this reason, it is tend
to be argued that what might be obnoxious to one individual might not be to the other and this
makes the provision constitutionally vague in its entirety.

A legislation having ambiguities in its e ective interpretation is declared to be void under the legal
system of India. The same has been a rmed in the case of Kartar Singh v. State of Punjab. In this
case, the court of law a rmed that an enactment must be proclaimed to be void for having
ambiguous characteristics in its prohibitory application. Therefore, the fundamental doctrine in our
jurisprudence system asserts that a law which regulates people in the society should provide a just
and rational notice of their conduct being unlawful or lawful.

Doctrine of Severability

There are certain cases in which the court of law is unpleased with the constitutionality of a law. In
such cases, the doctrine of severability comes into a play. The raison d’être given by the respondent
is ambiguous and irrational as it doesn’t assert which fraction or proportion of the Section 66A can
be spared. Section 66A of the Information Technology Act, 2000 is legislated in a language which is
prone to be misused by the authorities, and it contains an arbitrary restriction on the ‘freedom of
speech and expression’ which is inconsistent with the Article 19(2) of the Indian Constitution. As
stated under Article 13(1) of the Indian Constitution, any existing law inconsistent with Part III of the
Constitution is only null and void to the fraction of its discrepancy and not further.

In the historical case of Romesh Thappar v. State of Madras, the question pertaining to the
constitutional validity of Section 9(1A) of the Madras Maintenance of Public Order Act, 1949 came
before the court of law. The provision authorized the regional government to bar the ingress and
circulation of a newspaper for the maintenance of public order and safety in that region.
 Judicial Pronouncement at a Glance

Section 66 of the IT Act was abrogated in its entirety for infringing Article 19(1)(a) of the Indian
Constitution and not protected under Article 19(2).
Section 69A and Information Technology (Procedure and Safeguards for Interception, Monitoring
and Decryption of Information) Rules, 2009 was held intra-vires to the Constitution of India.
Section 79 was a rmed to be legitimate subject to the reading down of Section 79(3)(b) of the IT
Act.
Section 118(d) of the Kerala Police Act was also struck down by the Apex Court of India.

Section 79(3) in The Information Technology Act, 2000

(3) The provisions of sub-section (1) shall not apply if-
(a) the intermediary has conspired or abetted or aided or induced, whether by threats or promise
or othorise in the commission of the unlawful act;
(b) upon receiving actual knowledge, or on being noti ed by the appropriate Government or its
agency that any information, data or communication link residing in or connected to a computer
resource, controlled by the intermediary is being used to commit the unlawful act, the
intermediary fails to expeditiously remove or disable access to that material on that resource
without vitiating the evidence in any manner.
Explanation. -For the purpose of this section, the expression "third party information" means any
information dealt with by an intermediary in his capacity as an intermediary.]

A Section118Ca
a rms the o ence of causing infuriation to any individual by transmission of
statements or messages through any means of communication.
 Anuradha Bhasin V Union of India
Facts
Jammu & Kashmir is an Indian territory that shares its borders with Pakistan and has been exposed
to the disputes arising between the two countries since forever. On 02.08.2019, a Security Advisory
was issued by the Civil Secretariat, Home Department, Government of Jammu and Kashmir, advising
the tourists and the Amarnath Yatris to cut down their stay and make arrangements for their return.
All the educational institutions and o ces were ordered to remain shut until further notice.

All the mobile phone networks, internet services, and landline connectivity were stopped in the valley
on 04.08.2019. Further, restrictions on movement were also imposed in some areas. The District
Magistrate imposed restrictions on movement and public gatherings on account of powers vested
under Section 144 of Cr.P.C., on the same date. Owing to these restrictions, the movement of
journalists was prohibited. Further, the modern press couldn't undertake any publishing without the
internet.

Issues
The Supreme Court, in this case, identi ed ve major issues:
Whether the Government can claim exemption from producing all the orders passed under Section
144, Cr.P.C., and other orders under the Suspension Rules?
Whether the freedom of speech and expression and freedom to practice any profession, or to
carry on any occupation, trade, or business over the Internet is a part of the fundamental rights
under Part III of the Constitution?
Whether the Government's action of prohibiting internet access is valid?
Whether the imposition of restrictions under Section 144, Cr.P.C., was valid?
Whether the freedom of the press of the Petitioner in W.P. (C) No. 1031 of 2019 was violated due to
the restrictions?
Anuradha Bhasin vs Union Of India & Ors.
Bench: N.V. Ramana, V. Ramasubramanian

The petition W.P. (C) No. 1031 of 2019 was led by Ms. Anuradha Bhasin, the executive editor at
Kashmir Times, Srinagar Edition. She contended that it was next to impossible to carry out modern
press functions without the internet. Further, she added that she was unable to publish her newspaper
since 06.08.2019. She also argued about the failure of the government to give a valid reason for passing
the above-mentioned order. Her plea was for the government to nd a balance between the liberty of
citizens and the security of the nation. Further, the said restrictions were supposed to be temporary but
were imposed for hundred days.

The petition W.P. (C) No. 1164 of 2019 was led by Mr. Ghulam Nabi Azad, a member of parliament
belonging to the largest opposition party. He contended that it is essential for the restrictions to be
based on valid reasons and not mere speculations. Further, it was mandatory for the state to not hide
any o cial orders.

According to him, there are no valid grounds such as external aggression or internal disturbances as
stated under Article 356 of the constitution to declare a national emergency in this case. He further
contended that restriction on movement cannot be imposed on the public at large and can only be
speci cally imposed on the individuals who are disrupting the peace of the state; and that The state
should maintain a balance between the fundamental rights and safety of the citizens.

Regarding the suspension of internet services, he contended that such restrictions were a threat to
freedom of speech and expression and also to the execution of trade and profession. This petition was
later withdrawn during further arguments.
Analysis:
Whether the Government can claim exemption from the orders passed under Section 144, Cr.P.C., and
other orders under the Suspension Rules? Noexemption can be claimed
Citing Ram Jethmalani v. Union of India, the court held that for clause (1) of Article 32 to be meaningful,
the state needs to disclose the relevant information. Further, Article 19 of the Constitution has been
interpreted to mandate the right to information as an important facet of the right to freedom of speech
and expression. However, the court opined that this is not a valid ground to refuse the production of
orders.

Whether the freedom of speech and expression and freedom to practice any profession, or to carry on
any occupation, trade, or business over the Internet is a part of the fundamental rights under Part III of
the Constitution?
Yes
In Indian Express v. Union of India, the Court had declared that the freedom of print medium is covered
under the freedom of speech and expression. Further, in Odyssey Communications Pvt. Ltd. v.
Lokvidayan Sanghatana, it was held that the right of citizens to exhibit lms on Doordarshan is a part of
the fundamental right of freedom of expression guaranteed under Article 19(1)(a). This freedom can be
curtailed only under circumstances set out under Article 19(2).

In the case at hand, the Supreme Court, while citing the above-mentioned judgements, held that the
freedom of speech and expression through the medium of internet is an integral part of Article 19(1)(a)
and accordingly, any restriction on the same must be as per Article 19(2) of the Constitution.

Whether the Government's action of prohibiting internet access is valid?

The court was of the view that it has to take into consideration not only the substantive law
concerning the right to internet but also the procedural aspect to determine the constitutional
validity of internet shutdown.
The procedural mechanism was twofold:
Contractual mechanism: which dealt with the contract signed between Internet Service Providers
and the Government.
Statutory mechanism: which came under the ambit of Information Technology Act, 2000, the
Criminal Procedure Code, 1973, and the Telegraph Act,1885. In the present case, emphasis was
placed on the second mechanism.
The government is conferred with the power to restrict telecom services including access to the
internet, according to the suspension rules passed under Section 7 of the Telegraph Act. These rules
however include certain safeguards as they impact fundamental rights to a huge extent. In addition to
this, Section 5(2) of the Telegraph Act, permits suspension orders only in case of public emergency.
The maximum duration of the suspension order is not mentioned in these rules hence, it is the duty of
the review committee to give these orders for a suitable period that does not extend unnecessarily.
Here, all the orders were not placed before the Court and there was no clarity as to which orders were
in operation and which had already been withdrawn, hence, the relief was accordingly moulded in the
operative portion.

Whether the imposition of restrictions under Section 144, Cr.P.C., was valid?
The court observed that the power conferred under Section 144, Cr.P.C., is both remedial and
preventive. It is exercisable not only at the time of actual danger but also when there is an
apprehension of danger. However, the danger contemplated should be in the nature of an emergency.
The power under this cannot be used to suppress the legitimate expression of opinion, grievance, or
exercise of any democratic rights.

Whether the freedom of the press of the Petitioner in W.P. (C) No. 1031 of 2019 was violated due to the
restrictions? No
The court rejected the argument that the freedom of press was curtailed due to restrictions imposed in
movement and communication in Jammu and Kashmir. There is no doubt that the freedom of the press
is a valuable right enshrined under Article 19(1)(a) of the Constitution. However, the petitioner failed to
produce any evidence that the freedom of the press was curtailed by the imposition of restrictions.

Judgment
Supreme Court held that the internet is a Fundamental Right u/a 21 i.e., Protection of life and personal
liberty, u/a 19(1)(a) i.e., Right to freedom of speech and expression and u/a 19(1)(g) i.e., Right to
practice any profession, or to carry on any occupation, trade or business.

Inde nite suspension or shut down of internet services is a violation of Fundamental Rights.
The court did not lift the internet restrictions but ordered the government to review the same and held that
the government was empowered to undertake internet shutdown only after making such orders public.
The same was subjected to judicial review.
module 2
I E contract
an electronic contract (e-contract)

Section 2(h), of the Indian Contract Act, 1872, tells us that the term ‘contract’ is an agreement that is
enforceable under the law. Interestingly, in the case of an E-Contract, the essence of Section 2(h) is still
sustained by only tweaking the mode in which the Contract comes into existence.

Hence, an E-Contract is an agreement that is enforceable under the law and is in all respects drafted,
negotiated, and executed digitally. Unlike a traditional contract which is paper-based, E-Contracts are
digital in their entirety. In an E-Contract, though there is an absence of a physical meeting of the parties,
a meeting of minds is present absolutely. The parties communicate with each other over the internet or
through telephonic media. An E-Contract is a step ahead of traditional pen-paper contracts and comes
into existence through electronic and digital mediums.

Through Section 10-A of the Information Technology Act, 2000, we can procure the validity of the
contracts formulated through the electronic medium.. – Where in a contract formation, the
communication of proposals, the acceptance of proposals, the revocation of proposals and
acceptances, as the case may be, are expressed in electronic form or by means of an electronic
record, such contract shall not be deemed to be unenforceable solely on the ground that such
electronic form or means was used for that purpose.”
The nexus between Section 10 of the Indian Contract Act and Section 10(A) of the Income Tax Act
is that, when an E-Contract satis es all the essentials under Section 10 of the Indian Contract Act,
then as per Section 10-A of the Income Tax Act, it’s legal authenticity cannot be relinquished only
for the plain condition that it was digitally conceived and executed.
Consequently, when an agreement meets all the essential conditions of a contract, it cannot be
denied validity only for the mere reason that it was electronically formulated. In a nutshell, E-
Contracts are enforceable by law and considered valid contracts.
It is substantial to ascertain the legal validity of an E-Contract for the primary purpose of resorting
to legal recourse in the event of any breach thereof.
Kinds of e-contracts

E-contracts are speci c to the nature of the business. There are various types of E-Contracts executed
depending on the structure of the business. The amalgamation of the conventional contracts with the
pro ciency of technology constitutes an E-Contract. Below are a few of the most common types of E-
Contracts:

1. Shrink Wrap Agreements

2. Clickwrap Agreements

3. Browse Wrap Agreements

4. Scroll Wrap Agreements

5. Sign-In Wrap Agreements

Shrink Wrap agreements are the End User License Agreements (EULA) or Terms and Conditions, which
are packaged with the products. The technique of enclosing the product in a plastic wrap is called
Shrink Wrap which declares that the customer purchasing it is bound by the EULA. An example of
Shrink Wrap Agreements is Software Drives.

Clickwrap agreements are a form of agreement used for software licensing, websites, and other
electronic media. When the user logs in to a website the terms and conditions or the privacy policies
of the website are to be accepted by the user as legal consent. The user clicks “I Agree” to be bound
by the legal obligations. Some prominent examples of Click Wrap agreements are Amazon, Flipkart,
and Make My Trip.
Browse Wrap Agreements are online contract or license agreements commonly used in website notices
or mobile applications. The terms and conditions are provided in a ‘Hyperlink’ in some part of the
website which is not beforehand intimated to the user.

The Scroll Wrap Agreements require the user to scroll down the License Agreements, implying that it
has been read by the user by scrolling down through the terms and conditions before they can give
their assent or rejection.
The Sign-In Wrap agreement is a kind of E-Contract in which once the end-user has signed into an
online service or signs in to use a product the acceptance is acquired.
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 Mailbox Rule
The posting rule (or mailbox rule in the United States, also known as the "postal rule" or
"deposited acceptance rule") is an exception to the general rule of contract law in common
law countries that acceptance of an o er takes place when communicated. Under the posting
rule, that acceptance takes e ect when a letter is posted (that is, dropped in a post box or
handed to a postal worker); the post o ce will be the universal service provider, such as the
UK's Royal Mail, the Australia Post, or the United States Postal Service. In plain English, the
"meeting of the minds" necessary to contract formation occurs at the exact moment word of
acceptance is sent via post by the person accepting it, rather than when that acceptance is
received by the person who o ered the contract.

The rules of contracts by post (postal rules) include the following:

An o er made by post/letter is not e ective until received by the o eree.

Acceptance is e ective as soon as it is posted.
For revocation to be e ective, it must be received by the o eree before they post their letter of
acceptance.
One rationale given for the rule is that the o eror nominates the post o ce as his or her
implied agent, and thus receipt of the acceptance by the post o ce is regarded as receipt by
the o eror. The main e ect of the posting rule is that the risk of acceptance being delivered
late or lost in the post is placed upon the o eror. If the o eror is reluctant to accept this risk,
he can always expressly require actual receipt as a condition before being legally bound by
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2 Regulation of Ecommence
E-commerce is a game changer for the Indian economy and the future of 'Digital India’. The ability
of major rms in the Indian market to adapt and change with the times is critical to their success
during the Internet Age.
Introduction
E-commerce is a method of conducting business electronically rather than through traditional
physical means. This includes all internet-based retail activities such as purchasing goods, receiving
services, delivery, payment facilitation, and supply chain and service management.

Growth of E-Commerce
Government initiatives such as Startup India, Digital India, the allocation of funds for the BharatNet
Project, the promotion of a “cashless economy,” and the launch of the Uni ed Payment Interface by
the RBI and the National Payment Corporation of India have all contributed to the country’s e-
commerce sector’s growth and success.
E-commerce Laws FDI Policy
There are two models of E-Commerce Laws as de ned in the Indian FDI Policy:
Marketplace Model: E-commerce business registration on a digital and electronic network to serve as a
facilitator between buyer and seller is known as the marketplace based model of e-commerce. The
marketplace charges sellers a commission for the service it renders. The largest online marketplaces
now operating in the nation are Naaptol and Shopclues.
Inventory Model: A business that engages in online commerce using an inventory-based model
possessing a supply of products and services that are sold directly to customers. Likewise, the seller is
an online retailer that stocks it straight from brands and sellers. One such example is Myntra.
It is signi cant to note that, in accordance with the Government’s regulations on FDI in the e-commerce
industry, FDI is allowed under the automatic route in full under the marketplace model of e-commerce
laws but not under the inventory-based model.

Additionally, as per the FDI policy, contained in the ‘Consolidated FDI Policy Circular 2015’ (FDI Policy)
FDI up to 100% under automatic route is permitted in Business to Business (B2B) E-Commerce Laws.
No FDI is permitted in Business to Consumer (B2C) e-commerce.

However, FDI in B2C e-commerce is permitted in the following circumstances:

A manufacturer is permitted to sell its products manufactured in India through e-commerce retail.
A single-brand retail trading entity operating through brick-and-mortar stores is permitted to undertake
retail trading through e-commerce laws.
It is legal for an Indian manufacturer to sell its single-brand goods through e-commerce retail. The
investee business, which is the owner of the Indian brand and manufactures at least 70% of its
products in-house and sources a maximum of 30% of its products from Indian manufacturers, would be
considered the Indian manufacturer.

Role of Indian Contracts Act, 1872 r/w Information Technology Act, 2000
The IT Act regulates the requirements for electronic contract validity, proposal communication and
acceptance, proposal withdrawal, and contract creation between buyers, sellers, and intermediaries.
Furthermore, any online platform’s terms of service, privacy policy, and return policies must be
enforceable contracts.
Link with Payment and Settlements Systems Act, 2007
A ‘payment system’ is a mechanism that permits payment to take place between a payer and a
bene ciary. additionally involving 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 company 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.

Regulations Pertaining to Labelling and Packaging

An e-commerce business must adhere to and meet the labeling and packaging requirements set
out by the Legal Metrology Act of 2009, the Food Safety and Standards Act of 2006, the Drugs and
Cosmetics Act of 1940, and other relevant laws. In accordance with the Legal Metrology Act, 2009
read with the Legal Metrology (Packaged Commodity) Rules, 2011, the online platform is required
to provide the necessary details about the items being displayed. On the product page itself, they
must include information like size, weight, and other attributes.

Sales, Shipping, Refunds, and Returns under E-commerce Laws

The Sale of Goods Act, of 1930 regulates what information the entity’s sales and shipping policy
must provide. Moreover, such as the guarantees, terms, and the transfer of ownership in
commodities. In addition, the policy must state whether return/refund options are available or not.

Scope of Information Technology Act, 2000 and General Data Protection Regulations (GDPR)
E-commerce entities must comply with the Information Technology (Reasonable security practices
and procedures and sensitive personal data or information) Rules, 2011. Intermediary websites and
the content they display will be governed by the Intermediary Rules 2011, under the IT Act.

In addition, the European Union’s General Data Protection Regulation (GDPR India) came into force
in 2018. Additionally, to safeguard the data of EU citizens; a ecting practically all companies and
organisations around the world that do business with the EU, failure to protect personal data might
result in steep penalties of up to €20 million, or 4% of their annual global revenue.
 Intellectual Property Issues
All trademarks and copyrights for the products/text/symbols intended to be used must be secured.
While India has a well-de ned legal and regulatory framework for the protection of IP Rights. It is yet
to completely update the laws for complete e ciency in the virtual world. For instance, there is no
set law to prevent domain name deception and misuse except for a few judicial pronouncements.

Jurisdiction Issues

There is a dearth of Indian case law on the subject of the jurisdiction in the e-commerce industry. The
occurrence of several transactions makes dispute resolution di cult, particularly in the B2C sector.
Many local statutes, in general, allow for a long-arm jurisdiction, which means that the execution of
such local laws has extraterritorial application if an act or omission has certain illegal or unfavorable
e ects within the country’s territory.

Tanationofe commerce
The development of EC has revolutionized the way business operates. It has also challenged the
adequacy and fundamental validity of principles of international taxation such as physical presence,
place of establishment etc. that has formed the basis of asserting tax liability.

Business conducted through the internet caters to globally located customers. This raises cross border
legal issues. Transactions that may be legal and valid in one jurisdiction may not be enforceable in
others. Creation of wealth through cyber space would also entail the use of "o shore" nancial
institutions to store this wealth. This would constitute an elaborate and often untraceable form of tax
avoidance. This is not only a threat to national sovereignty but also overrides traditional principles of
taxation- a transgression of traditional notion of political and monetary autonomy. As wealth is generated
through the means of cyber space, accounting mechanisms and monetary control would become
di cult. Taxes on cyberspace would be one method of getting some amount of monetary control.

The allocation of taxing rights must be based on mutually agreed principles and a common man
understanding of how these principles should be applied. In addition to the need for consensus
between governments and business, a need for co-operation between them has also been identi ed.
 Some of the fundamental tax related issues raised by the evolution of EC transactions may be
summarized as follows: -
* Whether international trading by an enterprise through EC will result in the enterprise creating a
taxable PE in other countries in which customers are located?
* Is there a need to create new de nition and meaning of permanent establishment (Hereinafter
referred to as “PE”)?
* Is there a need to change the basis of taxation (for example, residence based taxation)?
* While considering taxation of EC transactions, should principles of tax neutrality be adhered to?

* If it is determined that an enterprise does have a PE in another country, another important issue
than arises: How to attribute pro ts to PE?
EC also gives rise to new issues concerning the characterization of payments under the double tax
treaties. Moreover, though EC does not give rise to any fundamentally new issues relating to
transfer pricing, there may be some di culties in applying traditional transaction methods,
establishing comparability, deciding the tax treatment of integrated businesses and complying with
documentation and information reporting requirements. Unless these issues are addressed, an
erosion of the tax base may result, especially for developing and under developed countries.
International Taxation - Treaty Law Regime

Fundamental Principles: A taxpayer is generally taxed on its worldwide income in the country of
its residence (residence based taxation). In the case of a company, this is usually the place where
the company is incorporated, registered, or has its place of central management and control.

The company may also be taxed in another country if it has a recognized source of income there
(source based taxation). Generally tax treaties restrict the use of domestic source rules by
requiring a minimum nexus to allow taxation in that jurisdiction. Thus, taxation of business income
on the basis of the source rule requires the presence, in the country of source, of a PE of the
enterprise sought to be taxed.
 The Constraints
International tax issues in the area of e-commerce are manifold and include nexus of the vendor and
tax enforcement agencies. Taxing authorities may have great di culty collecting revenue form
vendors conducting commerce through foreign Internet addresses. The foremost problem
associated with Internet based commerce is xing the place of transaction. The place where a web-
server is located, the place where the user initializes the transaction and the server where payment is
collected may be di erent. Electronic transfer of funds heightens the risk of money being sent to tax
havens. Further, many jurisdictions rely on the taxpayer to voluntarily identify himself, herself or itself
as falling within its tax system. Tax authorities may not be able to e ectively enforce their rights to
collect tax in such an environment, especially if a business does not consider itself to be within a tax
jurisdiction and simply choose not to disclose its activities to the relevant authority

Permanent Establishments

Where a foreign enterprise is considered to be carrying on business in a particular country, it will

generally be subject to tax in that country on that source of business income. However, it may be
exempted from tax on the business income in the particular country if certain provisions are in a
bilateral tax treaty. Tax treaties will generally restrict the ability of a country to tax a non-resident
on its business income sourced to that country unless the income is attributable to a “permanent
establishment” in that country. Thus, a foreign corporation that is resident in a country with
which its home country has a double tax treaty is liable for tax in the former only if it has a
permanent establishment there.

EC may pose problems for the de nition of permanent establishments that existing tax treaties
do not address. While as yet unforeseen questions are bound to arise, the current debate over
what constitutes PE can be broadly summarized in the following questions:
* Whether a mere accessibility of a website from within a particular jurisdiction subjects the
site-owners to income tax in that jurisdiction?
* Whether the presence of a server would constitute a PE?
* Whether a consumer’s computer constitutes a PE?
* Whether the provision of services by an Internet Service Provider (ISP) would constitute a
PE?
Treaty negotiators will have to examine these questions to see how treaty concepts can be

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Changes in the business practice due to the advent of the EC will a ect taxation in the following
ways: -

(i) Lack of any user control to the location of activity: As the physical location of an activity
becomes less important, it becomes more di cult to determine where an activity is carried out
and hence the source of income.

(ii) No means of identi cation of users: In general, proof of identity requirements for Internet use is
very weak. The pieces of an internet address (or domain name) only indicate who is responsible
for maintaining that name. It has no relationship with the computer or user corresponding to that
address or even where the machine is located.

(iii) Reduced use of information reporting and withholding institutions: Traditionally taxing statutes
have imposed reporting and withholding requirements on nancial institutions that are easy to
identity. In contrast, one of the greatest commercial advantages of EC is that it often eliminates
the need for intermediary institutions. The potential loss of these intermediary functions poses a
problem for the tax administration.

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4 FE Commerce and CosumerProtection
Electronic Commerce or e-commerce involves trade and transactions, the information of which is
transferred through the internet. There are three types of e-commerce:

Download Now
B2B {business to business}.
B2C {business to commerce}.
C2C {commerce to commerce}.
The concept and implementation of e-commerce came to the fore in 1999 when the OECD
{organization adopted the rst International Instrument for Consumer Protection for economic
cooperation and development} Council in the context of electronic commerce. After an initial reviewing
of their policies, recommendations were noted as to how the idea of e-commerce could be embraced.
Consumer Protection
A report by the Internet and Mobile Association of India has revealed that India’s e-commerce market
reached USD 20 billion. The e-commerce has made a huge impact on most of the industries in India,
the travel industry in particular. The other notable ones being the telecommunication industry, the
online trading industry, etc. The government here has promoted e-commerce extensively, which is, in
fact, a promotion of the e-consumer activities, mainly focusing on the delivery of services. However,
the legal control still has to catch up with supply.consumer-protection-in-e-commerce

E-commerce being global and domestic in nature, e orts have been thoroughly made to ensure its
protection. In India, the Consumer Protection Act 1986 governs the relations between consumers and
the provider of services/goods. It should be noted here that no speci c act regulates the online
transactions. The consumer protection act has been carefully designed to muster the con dence of
consumers in law and liability under this act thus arises when there is a de ciency in services or defect
in goods or sometimes as the case maybe, unfair trade practices. The Consumer Protection Act
speci cally excludes from its ambit any service that is free of charge. Depending upon who is selling
the actual goods to the consumers, liability triggers. Also, distribution of goods comes within the
purview of consumer protection act. Some of the various protections under the consumer protection
act on e-commerce can be listed below

Removal of defects.
Replacement of goods.
Return of price in case of discrepancy.
Discontinue any form of restrictive trade practice.
International Organizations

Many organizations are working for the protection of the consumers. Some of them are— Economic
Cooperation and Development, International Chamber of Commerce and International Consumer
Protection and Enforcement Network.

Economic Cooperation and Development {OECD}: The guidelines sanctioned after intense negotiation in
the context of e-commerce, proved much helpful to the government, consumers, business and became
practically feasible. They embraced exibility in response to the development of age. The guidelines also
achieved a benchmark for consumer protection in the online marketplace. They facilitate online trade,
thereby not implementing any of the restrictive trade policies. Some of its universal guidelines for
consumer protection in e-commerce are as follows.download-3

E-commerce should get an equal protection, when shopping online or when buying the same goods from
a local store.
There should be a complete disclosure about the goods and services rendered. The e- customers should
be aware of the transaction, they have consented to. They should be having a complete knowledge of
what they are buying and the transaction they are dealing with.
The con rmation process for sale should give a fair chance to the consumer for reviewing the products
that he intends to buy, in case there is any cancellation.
Most importantly, the system of payments must be secure and reliable.
In the case of an international transaction, if a dispute arises, it becomes di cult to redress. Thus
Alternative Dispute Resolution system is recommended here.

International Chamber of Commerce: It was in 1996, that the organization released ‘guidelines on
advertising and marketing on the internet’. The guidelines issued by the ICC were meant to be
applied to all promotional activities like marketing and advertising on the internet. They set standards
of ethical conduct to be observed by all involved in the above activities.Its speci c objectives with
respect to consumer protection in the sphere of e-commerce can be checked out at a
glance:download
Improve and instill the public con dence in advertising and marketing via the new system.
To safeguard optimal optimal freedom of expression for advertisers and markers.
To minimize the need for governmental legislation or regulation.
International Consumer Protection and Enforcement Network: The ICPEAN aims to preserve and
protect the interests of the consumers all over the world. It shares information about activities taking
place across borders which may be of use to the consumers and promote their welfare to encourage
global cooperation among law enforcement agencies.

The Okinawa Charter on Global information society addressed topical issues at length like, making use
of digital opportunities, bridging the digital divide, promoting global participation. To achieve its
objectives, it has set forth policies and guidelines, thus increasing access and participation in global e-
commerce networks.

Following are some general principles that have been recommended and accepted universally, so as
to protect the consumers in e-commerce:

Consumers who participate in e-commerce should be provided with transparent and e ective
consumer protection that is a ordable for which government and stakeholders might work
together.download-2
Businesses should in no circumstance engage in making representation or practice anything that’s
misleading or works to the right of the consumers.
Businesses should never conceal any term or condition that might a ect the consumer’s decision
regarding the transaction
If a contract’s term stipulates the monetary damage to be furnished in the case of consumer’s violation
of the contract, it should be ensured that such compensation is in proportion to the damage caused.
Businesses should not restrict a consumer’s ability to make negative reviews, dispute charges or le
complaints with government and other agencies.
Advertising and marketing should be clearly identi able as such
Advertised price must not hide the total cost of a good or a service
The payment made for the con rmation of a transaction must be clearly stated and not be ambiguous
under any circumstances. Transactions in e-commerce can only process with the informed consent of
the consumers.
Businesses should enable the consumers to maintain a record of such transaction for future use as
evidence or other things, as the case maybe
Businesses must manage the digital security risk and implement security measures for reducing or
mitigating adverse e ects relating to e-commerce.
 The Consumer Protection Bill, 2015

The Consumer Protection Bill was introduced in the Lok Sabha on August 10, 2015. The bill
proposes to replace the Consumer Protection Act 1986, and this shall also incorporate e-
commerce. This bill seeks to widen the ambit and modernize the law on consumer protection due
to changes in the market. India is experiencing a robust growth in its e-commerce sector which has
crossed 15 billion dollars. Ordinarily, any regulation is more likely to introduce complexity in the –
business.download-1

It should be noted, that many e-commerce companies in India may be engaging in business
malpractices and evading taxes, leading to a substantial loss of government revenue. This bill,
therefore, is expected to target those aspects of e-commerce business which are unethical and
also misleading to the consumers. The bill incorporates certain stringent penalties for the o enses
committed by e-retailer. There is strong support for the passing of this bill and in light of modern
circumstances, it seems to be an emergency. The new entrepreneurs, as well as the old ones, must
understand the precisions of this bill that focuses well on the consumer protection for the internet
age in India.

E bankingandElectronicpaymentsystem
In India’s journey towards E-payments, digitization, merchants, as well as customers, are getting
comfortable adopting new digital technologies.
With customers are getting comfortable with online shopping, nowadays, an eCommerce site and
online payment acceptance is a must to have for any business.
Customers are happy with browsing and shopping at any time from anywhere with just a few clicks
and along with this rise of online shopping and eCommerce, E-payments are gaining widespread
popularity.
COVID and the limitation it has imposed on people who made online payments the need of time. Many
businesses are now o ering their products and services online.
However, if you are a business and want to accept e payments, you have to work on your electronic
payment system to provide better and secure service for your customers.
An e-payment or Electronic Payment system allows customers to pay for the services via electronic
methods.They are also known as online payment systems. Normally e-payment is done via debit,
credit cards, direct bank deposits, and e-checks, other alternative e-payment methods like e-wallets,
bitcoin, cryptocurrencies, bank transfers are also gaining popularity.
E-payments can be done in the following ways,
Internet banking – In this case, the payment is done by digitally transferring the funds over the
internet from one bank account to another.
Some popular modes of net banking are, NEFT, RTGS, IMPS.
Card payments – Card payments are done via cards e.g. credit cards, debit cards, smart cards,
stored valued cards, etc. In this mode, an electronic payment accepting device initiates the
online payment transfer via card
Credit/ Debit card – An e payment method where the card is required for making payments
through an electronic device.
Smart card – Also known as a chip card, a smart card, a card with a microprocessor chip is
needed to transfer payments.
Stored value card – These types of cards have some amount of money stored beforehand and
are needed to make funds transfer. These are prepaid cards like gift cards, etc.
Direct debit – Direct debit transfers funds from a customer’s account with the help of a third
party
E-cash – It is a form where the money is stored in the customer’s device which is used for
making transfers.
E-check – This is a digital version of a paper check used to transfer funds within accounts.
Alternate payment methods – As technology is evolving, e-payment methods kept evolving with
it (are still evolving..) These innovative alternate e-payment methods became widely popular
very quickly thanks to their convenience.
E-wallet – Very popular among customers, an E-wallet is a form of prepaid account, where
customer’s account information like credit/ debit card information is stored allowing quick,
seamless, and smooth ow of the transaction.
Mobile wallet – An evolved form of e-wallet, mobile wallet is extensively used by lots of
customers. It is a virtual wallet, in the form of an app that sits on a mobile device. Mobile wallet
stores card information on a mobile device. The user-friendly nature of mobile wallets makes
them easier to use. It o ers a seamless payment experience making customers less dependent
on cash.
QR payments – QR code-enabled payments have become immensely popular. QR code stands
for ‘Quick Response’ code, a code that contains a pixel pattern of barcodes or squares
arranged in a square grid. Each part of the code contains information. This information can be
merchant’s details, transaction details, etc. To make payments, one has to scan the QR code
with a mobile device.
Contactless payments – Contactless payments are becoming popular for quite some time.
These payments are done using RFID and NFC technology.

The customer needs to tap or hover the payment device or a card near the payment terminal, earning
it a name, ‘tap and go’.

UPI payments – NPCI (National Payment Corporation of India) has developed an instant real-time
payment system to facilitate interbank transactions.

This payment system is titled UPI(Uni ed Payment Interface). Payments via UPI can be made via an
app on a mobile device.

Biometric payments – Biometric payments are done via using/scanning various parts of the body, e.g.
ngerprint scanning, eye scanning, facial recognition, etc.

These payments are replacing the need to enter the PIN for making transactions making these
payments more accessible and easy to use.

Payments are done via Wearable devices – Wearable devices are rapidly becoming popular among
customers.

These devices are connected to the customer’s bank account and are used to make online
payments.

An example of a wearable used for making an online payment is a smartwatch.

AI-based payments – As machine learning and Arti cial Intelligence is creating a revolution all around
the world, AI-based solutions are becoming more popular.

Payments based on AI such as speakers, chatbots, ML tools, deep learning tools, etc are making it
easier for businesses to maintain transparency.
How e-payment system works?
Entities involved in an online payment system
The merchant
The customer / the cardholder
The issuing bank
The acquirer
Payment Processor
Payment Gateway
Working of e-payments can be explained in the following three steps,
Payment initiation – Customer nalizes the product/service and chooses the payment method toinitiate
the transaction.
Depending on the payment method, the customer enters the required information like card number,
CVV, personal details, expiration date, PIN, etc.
The chosen payment method either redirects the customer to an external payment page or a bank’s
payment page to continue the payment process.
Payment authentication – The information submitted by the customer along with other details like
payment information, customer’s account information is authenticated by the operator.
Payment settlement – After the successful authentication process, payment from the customer’s
bank gets transferred into the merchant’s account by the online payment service provider.

Bene ts of e-payment systems

People are almost comfortable with online shopping and e-payments. With this trend, accepting
online payment is a must for any business.

E-payments are making shopping and banking more convenient. They are helping customers to
reach more clients locally and globally.

E-payments are faster making the transactions e cient.

With e-payments, customers can pay online at any time from anywhere, making them easily
accessible and convenient for customers.
 Legal Issues in E banking
Major Issues in Indian E-Banking System
Though the Banks are providing virtual and user friendly E-Banking Systems in India, yet it is facing and
su ering from some major loopholes which are likely causing harm and detriment to the privacy and
security of the customers at large, some of such major issues are:
Security and Privacy Risks: A recent study conducted in 2012 reveals that the Technology used in Cloud
Computing for o ering the E-Banking Services to its Customers are so weak and unsecured that it
makes the Customers too vulnerable to Banking Frauds and E-Banking Scams. Even after taking
preventive measures In this regard like Know Your Customer (KYC) and Biometric Finger Veri cation the
security concerns and privacy issues are major roadblocks in the pathway of a smooth and successful
E-Banking in India.
Legal Issues: It is an accepted fact that despite having strict and speci c statutes like Information and
Technology Act, 2000 and Indian Penal Code, 1860 for curbing the Cyber Crimes, they are increasing
day by day very rapidly and acting like a silent killer in our society. The present situation widely forecasts
that there is still a lacuna in the present legal system and structure for tackling the Cyber Crimes and
Criminals more strictly and perfectly.
It must be noted that the E-Banking is not a separate business among the Banking Channels, but it is
only an additional facility provided by the Banks to its customers on an additional monthly charges like
SMS, Annual Membership, etc. which is completely optional i.e. is dependent on the Customers to avail
it or not. The Reserve Bank of India is regulated by the RBI Act, 1934 and for Electronic Records and
System according to the provisions of Information and Technology Act, 2000.
Case Study: The ICICI Bank has kicked o the online banking in 1996 describing it as rubbish and
useless, which was even done by the host of other banks. But even that the phrase from 1996 to
1998 was described as a “Adoption Phrase”, at-last which was even accepted by the ICICI Bank. But
the usage of the E-Banking in India, raised gradually only from 1999, owing to lower ISP Charges, and
increased penetration of PC’s with a tech-friendly atmosphere.

The Public Sector Units (PSU’s) since inception lagged in exercising and adopting the E-structuring
and Internet Services. Among which the State Bank of India was the rst bank in India who took the
lead and was the primary in adopting the E-Banking Practices in India.
It can be widely seen that despite having all this set of regulations and Hon’ble Authorities for the
regulation and maintenance of E-Banking, even then we are not having any speci c provisions for curbing
the E-Banking Frauds and Cyber Frauds in India, rather than the traditional ones. Even if some of my able
readers disagrees with me then too they must accept the fact that the enforcement structure and
personnel involved in the same is too timid and un-trained which is the main reason behind the rapid
increment in the Cyber Crimes in India, since the past decade. The Legal Framework of the Indian Banking
System is governed by the following set of statutes which are as follows:

The Banking Regulation Act, 1949

The Reserve Bank of India (RBI) Act, 1934
Foreign Exchange Management Act, 1999
Indian Evidence Act, 1872
Indian Contract Act, 1872
Information and Technology (IT) Act, 2000
Securitization and Reconstruction of Financial Assets and Enforcement of Security Interest Act (SARFAESI)
Act, 2002
Negotiable Instruments Act, 1881

Provisions of Information and Technology Act, 2000

The Provisions of the Act, widely deals regarding the Management in o ering of E-Banking Services
by the Bank Channels along-with dealing to speci c provisions for curbing the E-Banking Frauds and
other ancillary Cyber Crimes.

The Section 3(2) of the Information and Technology Act, 2000 provides speci c provisions for a
particular technology as a means of authenticating the records, like the Servers of Banks and other
virtual platforms by virtue of which the Banks provide us the E-Banking Services.
The Section 4 of the Information and Technology Act, 2000 further says regarding the security and
privacy of a customers information that any matter which shall be in writing or in a type-written form/
printed form, then notwithstanding anything contained in such law, such requirement shall be deemed
to have been satis ed as true, if such information is rendered and certi ed in an electric form and is
accessible so as to be usable for the subsequent references.
 The Section 72 and Section 79 of the Information and Technology Act, 2000 further provides the
liability for Breach of Privacy of the Customers on the Service Providing Agency or the Intermediary
which is responsible for providing the Data Service travelling through their servers on certain terms and
conditions.
For improving the quality and status of the E-Banking services G. Gopalkrishna Working Group
(GCWG) in 2011 has released a Report on the Security of E-Banking in India with some amendments
on 29 April, 2009 which presently constitutes the current regulatory guidelines as an extension of IBG
2001.

Tanation of e commerce OECD model

This de nition contains the following conditions:-
* The existence of a ‘place of business’, i.e., a facility such as premises or, in certain cases,
machinery or equipment;
* The place must be xed, i.e., it must be established at a distinct place with a certain degree of
permanence;
* The carrying on of the business of the enterprise through this xed place of business.

The conduct of a business usually implies that certain persons run the enterprise’s a airs from the
xed place. However, the OECD comments concerning automatic equipment make it clear that it is
not necessary for personnel or any other human being to be present performing particular activities in
order for there to be a PE.

A PE will also be deemed to exist ‘where a person other than an agent of an independent status is
acting on behalf of the enterprise and has, and habitually exercises an authority to conclude
contracts in the name of the enterprise.

Most treaties list a number of business activities which are not considered as PE. The common
feature of these activities is that they are, in general, preparatory or auxiliary in nature.

Substantive
2Nexus, Nevus
a connection between V SApproach
a business and the state, must exist for a state to impose income tax.
States establish the rules to use when determining how much in-state activity by an out-of-state
business creates nexus. Nexus standards have evolved over time. The physical presence standard was
largely replaced by an economic nexus concept. The economic presence standard better t the
expanding use of e-commerce. States using the economic presence standard can impose tax on out-of-
state companies doing business in the state, but that do not have a physical presence in the state. Now
states are applying a factor presence nexus standard to provide a more certain numerical standard
Business Connection under Indian Domestic Tax Laws
The Indian domestic tax laws have stated that all the incomes generated or arising in India, regardless of
it being directly or indirectly earned, through or from any business connection in India shall be deemed
to accrue or arise in India itself. In simpler terms, any income obtained from a business by Non-
Residents of India is taxable in India if the said individual has a business connection in the country. This
article talks about the Business Connection under Indian Domestic Tax Laws and the essentials
information related to the same.

Overview
The scope of business connection under the Indian domestic tax laws was similar to those provisions
under the Dependent Agent Permanent Establishment (DAPE) in Article 5(5) of the Double Taxation
Avoidance Agreement (DTAA) that is entered into by India with other countries. Under the said terms, if
an individual acting on behalf of a Non-Resident is habitually authorised to conclude contracts for the
Non-Resident. Then, such an agent would constitute a permanent establishment in the source country.

However, under various cases, with the intention of avoiding a permanent establishment under Article
5(5) of the DTAA, the individual acting on behalf of the Non-Resident negotiates a contract but does not
conclude the agreement. Therefore, a review was conducted by the Organisation for Economic Co-
operation and Development (OECD) under the Base Erosion and Pro t Shifting (BEPS) to rede ne the
de nition of a Permanent Establishment in order to prevent the avoidance of tax payments by
circumventing the existing Permanent Establishment de nition according to commissionaire
arrangements or fragmentation of business activities.
 case laws
lo PIR 1965
1 CIT Punjab N R D Aggarwal
HEADNOTE:
The assessees were a rm carrying on business as importers and commission agents. They
communicated orders canvassed by them from dealers in India to non-residents for acceptance; if a
contract resulted and the price was paid by the Indian dealers to the non-resident exporters the
assessees became entitled to a commission. In assessment proceedings the income of the assessees
was computed by the addition of 5% of the net total value of the sale e ected by the non-resident
exporters in the previous year, because in the Income-tax O ccr's view there subsisted a 'business
connection' between the non-resident dealer and the assessees. The appellate authorities upheld
the said view.
The High Court however held that there was no 'business connection' within the meaning of s. 42(1)
between the assessees and the non-resident exporters. The Commissioner of Income-taxappealed to
the Supreme Court by special leave.
HELD (i) Section 42(1) of the Indian Income-tax Act, 1922, seeks to tax those pro ts of a non-resident
which arise or accrue to him outside the taxable territories through or from a "business connection"
within the taxable territories.
[665 C-E].
(ii)"Business connection" which is not de ned in the Act, may as several forms : it may include
carrying on a part of the main business activity incidental to the main business of the non-resident
through an agent, or it may merely be arelation between the business of the nonresident and the activity
in the taxable territories which facilitates o assists the carrying on of that business. In each case the
question whether there is a business connection from or through which income pro ts and gains
arise or accrue to anon-resident must be determined upon the fact and circumstances of the case.
[664 H; 665 B]
(iii)The expression "business connection" postulates a real and intimate relation between trading activity
carried on outside the taxable territories and trading activity within the territories, the relation between
the two contributingto the earning of income by the non-resident in his trading capacity. In the present
case, the activity of the assesseein procuring orders was not as agents of the nonresident it, the matter of
sale of goods manufactured by the latter nor of procuring raw materials in the taxable territories for their
manufacturing process. Their activity only led to the making of o ers by merchants in the taxable
territories topurchase goods manufactured by the non-residents assessees.

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