Enact e-commerce laws to protect consumers: Tamil Nadu to Centre

CHENNAI: The Tamil Nadu government today suggested that an omnibus "e-commerce law" be enacted to protect consumers and provide a level playing field to all retail players.

Stating that e-commerce players were only "intermediaries" facilitating the sale of goods owned by a seller to a purchaser without getting into the element of "ownership", state Commercial Taxes Minister M C Sampath said, "this does not appear acceptable".

"We suggest that an omnibus e-commerce law may be enacted to cover B2B, B2C transactions with a view to protect consumers besides providing a level playing field to all players in retail space," he said.

"A monitoring mechanism has to be put in place to ensure that FDI regulations are not violated by e-commerce platform or sellers, harming the interests of brick-and-mortar retailers", he said.

"Tamil Nadu had strongly opposed the decision of the previous UPA government at the Centre to permit FDI up to 51 per cent in multi-brand retailing and 100 per cent in single brand retailing which came as a rude shock to the lakhs of traditional retail vendors in the country," the minister said.

He was addressing members at the Stakeholder Consultation Meeting on Formulation of Suitable Guidelines on e-commerce transactions in New Delhi, chaired by Commerce Minister Nirmala Sitharaman.

The Centre, while framing guidelines and policies, should "ensure" that the interest of small traders and shop owners be "effectively protected", he said.

Tamil Nadu's experience shows the entities carrying out e-commerce business located outside the state's jurisdiction fail to comply with the provisions of the applicable Sales Tax laws, Sampath said.

He said it was "unclear" whether e-commerce service providers comply with relevant labour and consumer protection laws.

"Such entities cannot be allowed to escape the essential regulatory frameworks. This would be against public interest and provide them an unfair advantage to the regular brick-and-mortar retail stores," the Minister said.

Observing that the commodity taxation was a main source of revenue for a state, he said, "ensuring that the revenue base is not eroded through sharp e-commerce practices is a serious concern for us".

"We strongly urge that all regulatory and tax laws governing brick-and-mortar retail business should be made equally applicable to e-commerce business also without any exception to maintain the level playing field", he said.

He said it was very difficult to identify the nature of transactions carried out in e-commerce entities and existing VAT and CST laws need to be strengthened to avoid "tax evasion".