The Government of India was questioned by a bench of High Court justices regarding tax collected from Facebook’s India centric operations. The bench comprised of Justice Badar Durrez Ahmed and Siddharth Mridul; and the questions were raised after advocate Virag Gupta, representing former BJP leader K N Govindacharya, raised these issues before the court.
Some of the vital questions which were asked by the Delhi High Court regarding Facebook were:
“How is Google paying (service tax), but not Facebook? How is Facebook exempted? We are finding it difficult to understand..”
“Find out what they (transactions) are? Whether they are chargeable and whether the services provided, if any, are by entities in India or from outside?”
Questions were also raised regarding the sale of data by social media companies to advertisers and social media guidelines for a fair usage. The court has asked the government to file a ‘better affidavit’ on the issue, and come up with regulations related to email usage policy and social media guidelines.
Government of India was represented by advocate Sanjeev Narula, who shared his argument that Facebook Inc. has no office in India, hence they are not required to pay any service tax. However, Facebook India Inc. has three offices in India at Delhi, Hyderabad and Mumbai, and considering that these offices are located in Special Economic Zones, the company is not liable to pay any tax.
However, the court was in no mood to relent and sought exact details on all the transactions which are made between Facebook India and companies which are advertising on their platform. The court has sought specific details on these ‘transactions’ such as what is the nature of these monetary exchange and why can’t the government levy taxes on these transactions.
At one point, the bench stated,”Why don’t you know all these? Are you alive to these things or is it beyond your comprehension,”
In the past, Government of India has actively pursued cases related with market domination and illegal mapping against Google India, some of these cases are still pending and investigation is on.
This recent summons against functioning of Facebook is certainly not shocking considering that they have more than 100 million ‘active’ users in India (as of April, 2014), and lots of brands and companies are using their advertisement platform for marketing and advertisement purposes. Although they have not revealed how much dollars Indian operations are contributing in their overall revenues. Last year, they had reported total revenues of $7.87 billion (Rs 47,220 crore).
Because Facebook making money from India but head Quarter is in other countries.