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Online Pharmacy And E-Pharmacy Laws In India

Tuesday, May 24, 2016

Salient Features Of The Nagaland Gaming Act, 2016

The Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Bill, 2015 (“Bill”) has now become an applicable law and very soon rules would also be added to the same. Once the rules are added, actual implementation of the Nagaland Gaming Act, 2016 would be possible.

Surprisingly, the Nagaland Gaming Act, 2016 has not been made public by the government of Nagaland so far. Perry4Law Organisation (P4LO) has already contacted the Nagaland government and has requested for the official documents in this regard so that we can share the same with gaming stakeholders. For the time being, Perry4Law Law Firm has provided an analysis of the Nagaland Gaming Act, 2016 based on the publicly available information and inputs. Please see the Nagaland Prohibition of Gambling and Promotion and Regulation of Online Games of Skill Bill 2015: Salient Features (pdf) for the complete analysis.

However, for those who are in a hurry, we have also provided an abridged version of this analysis. Please see the article titled Salient Features Of The Nagaland Prohibition Of Gambling And Promotion And Regulation Of Online Games Of Skill Act 2016 in this regard. Many online poker, online rummy and online fantasy sports entrepreneurs would be happy to apply for a licence in due course of time.

However, we at Perry4Law Law Firm believe that the Nagaland Gaming Act, 2016 has certain "legal infirmities" that must be immediately removed by the government of Nagaland. Otherwise, online gaming stakeholders would be vulnerable to legal risks and litigation threats across the nation.

Some of the salient features of the Nagaland Gaming Act, 2016 are as follows:

(1) The Act allows games of skills and prohibits games involving gambling elements.

(2) Some games have been specifically included in games of skill and this would reduce the confusion about the nature of gambling activities. However, inherent conflicts and inconsistency is there in the provisions of the Act and this would create problems for the gaming stakeholders in future.

(3) Severe fines have been prescribed by the Act for gambling activities. For instance, a fine of Rs 20 lakhs will be applicable in the first instance, followed by an imprisonment of 6 months if not remedied further.

(4) Games which have been declared by courts (Indian or International) as games of skill may be included in this list in future. The Finance Commissioner or any Licensing Authority will be permitted to add to this list the games of skill as long as it is in consonance with the definition of ‘Games of Skill’ under the Act.

(5) The Act applies to any territory in India in which “games of skill” are permitted and are recognised as being exempt from the ambit of “gambling”.

This would raise serious legal issues as till now the legality of games like online poker, online rummy, e-sports, fantasy sports, online card games, online fantasy games, online lotteries, etc is not clear.

P4LO has been managing a Blog titled Online Gaming And Gambling Laws And Regulations In India to help online gaming and online gambling stakeholders of India and other jurisdictions. This Blog can be used as a guidance by the gaming stakeholders and if they need our techno legal professional assistance, they can establish a client attorney relationship and seek our services.

(6) Indian place of business and Indian connections are essential for getting a licence from the Nagaland government. An interest in any online or offline gambling activities in India or abroad would bar an individual or entity from getting the licence.

(7) The State Government, may, by notification, designate an authority or body to monitor and regulate the activities of all licensees to ensure compliance with the provisions of this Act, and to settle all disputes arising from the activities conducted under this Act

(8) If the licensee operates in a state where the state government believes the company is violating the provisions of the act or its rules, or in violation of local laws, it may inform the licensing authority of Nagaland. The licensing authority shall then try and get the issues resolved.

P4LO welcomes this legislation from Nagaland government. However, there are certain techno legal issues that have skipped the attention of government of Nagaland. It would be prudent to cover those issues before the rules are notified by the Nagaland government.

Further, in their own interest, the online gaming stakeholders who are planning to explore Nagaland's market must also undergo a techno legal audit so that their online gaming business runs smoothly the moment it is started.

Sunday, May 22, 2016

Is It Legal To Run An Online Fantasy Sports Website In India

As growing number of people have started using information and communication technology (ICT), as has also encouraged many entrepreneurs to launch ICT enabled e-commerce and business ventures. Few such ventures include online gaming, online gambling, online poker, online rummy, online games, e-sports websites, etc. Another related business venture is online fantasy sports websites that have become very popular across the world.

Fantasy sports have also become very popular in India. However, the legality of running and playing online fantasy sports in India is still a tricky issue. We at Perry4Law Law Firm are frequently approached regarding managing the legal issues of online gaming, online gambling, online poker, online rummy, online games, e-sports websites, online fantasy sports websites, etc in India and other jurisdictions. We have suggested all our client to comply with techno legal compliances associated with these online and virtual games. We have very categorically told them they should not launch their websites and business ventures before they comply with techno legal issues associated with these websites.

Just like any other online games, entrepreneurs engaged in fantasy sports in India are also required to comply with certain techno legal requirements. There is a need to change the mindset of online games entrepreneurs who are still not serious about legal issues in India. Even if some are interested in complying with the legal requirements of online gaming they are ill advised and do not comply with Indian laws properly. The fact remains that there are a set of legal compliances for running an online fantasy sports website in India.

This techno legal compliance must not be confused with a dedicated law for running an online fantasy websites in India that is still missing. The problem stems from the fact that there is no clear regulatory framework that can be looked upon to decide legality or illegality of online poker, online rummy, online card games, fantasy sports, etc in India. On the other hand, regulatory compliances are scattered among different laws of India and combining them together at a single place is a big challenge. Unfortunately, online gaming and fantasy sports websites in India are not complying with these techno legal requirements and they are on the wrong side of Indian laws. Merely because government has not taken legal actions against them does not mean that it is legal to run an online fantasy sports website without complying with the techno legal requirements.

As on date, online gaming, online gambling, fantasy sports and online lotteries websites are not complying with the internet intermediary compliances and cyber law due diligence (pdf) requirements prescribed under the Information Technology Act 2000. Similarly, almost all of the online poker websites in India are violating one or other laws of India. Although online gaming market in India is booming yet regulatory compliances cannot be ignored. It seems online gaming and online gambling industry of India is not considering regulations while conducting their businesses in India.

Perry4Law conducted a techno legal audit of various fantasy sports websites operating in India and we found the same problems with them as have been discussed above. Almost all of these fantasy sports websites have used a single cut-copy-paste criteria when it comes to techno legal compliances and drafting of legal documents of the websites. Clearly, these online fantasy sports websites are violating the laws of India and they may be prosecuted very soon. Those using mobile applications can also be prosecuted if they fail to comply with techno legal regulatory norms of India.

Even the banks, payment gateways and online payment merchants, mobile payment vendors, etc supporting these online poker, online rummy, online card games and fantasy sports websites can be held liable for not following cyber law due diligence norms as they have blindly approved online payment option to these illegal and law breaking websites. These banks and payment gateways can also be held liable for money laundering, FEMA violations and assisting in tax evasion. If such banks, payment gateways and online payment merchants have already approved such illegal and law breaking online poker, online rummy, online games and fantasy sports websites in India, it is in their own interest to cancel such approval immediately. The banks etc must ask them to first comply with applicable techno legal compliances and then support their claims with a proper techno legal consultancy from a reputed law firm.

If you need a techno legal compliance and legal consultancy from Perry4Law for your online games or fantasy sports, please establish a client attorney relationship so that we can start working upon your project. Perry4Law wishes all the best to all gaming stakeholders and entrepreneurs.

Sunday, May 15, 2016

E-Commerce Websites And Online Pharmacy Companies Are Not Complying With Techno Legal Regulations Of India For Online Medicine Sales

Online pharmacies are poised to big growth in Asia and India is number one choice in this regard. There is no dearth of entrepreneurship in India and there are plenty of online pharmacy and healthcare entrepreneurs in India. As on date most of these entrepreneurs are stressing upon business growth and development rather than upon regulatory compliances. This is more so when we have no dedicated laws for online pharmacies, telemedicine, e-health, m-health, privacy protection, data protection (pdf), cloud computing, etc. Healthcare cyber security is another area of concern that most of the healthcare service providers in India are currently ignoring.

Nevertheless, telemedicine and online pharmacies businesses in India must comply with existing techno legal laws of India. But this is not happening as on date and many e-commerce portals have been facing heat of law enforcement agencies of India. For instance, Maharashtra’s FDA has already ordered filing of FIRs against Snapdeal, its CEO Kunal Bahl, directors and distributors for online sale of prescription drugs. Similarly the Indian government has just clarified about the Foreign Direct Investment (FDI) in e-commerce sector of India so that foreign exchange related violations can be better tackled. The Delhi High Court has already ordered the government to investigate 21 e-commerce websites for possible violations of foreign direct investment (FDI) laws. But as on date the techno legal compliances for e-commerce industry in India are not complied with by a dominant majority of e-commerce businesses.

Online sale and purchase of prescribed drugs and medicines in India is still a neglected area as far as regulations are concerned. Till May 2016 we have no dedicated online pharmacies laws in India and telemedicine laws in India. As a result illegal and unregulated online sales of prescribed medicines in India have increased a lot. This fact also came to the knowledge of Indian government and now online pharmacies websites of India are under regulatory scanner and punishment may follow. In fact, the fast growing and uncontrollable number of online pharmacies, mostly based abroad, has posed a serious challenge to State drug control authorities. They are simply not in a position to regulate the affairs of these online pharmacies that are openly violating the laws of India.

The Drugs and Cosmetics Act, 1940, and the Drugs and Cosmetics Rules, 1945, have clear guidelines on the sale of Schedule H and Schedule X drugs. These can be sold only on prescription and there are specific rules, including for labelling. Even bar-coding of primary level packaging of export consignment of pharmaceuticals and drugs have been prescribed by India. The Directorate General of Foreign Trade (DGFT) has recently amended the procedure for implementation of the Track and Trace system for export of pharmaceutical and drug consignments from India.

Individuals and companies selling pharmaceutical products through website are also required to comply with various laws. These include laws related to medicines and pharmacy profession and cyber law of India. Surprisingly most of the online pharmacies stores and websites in India are not aware about the cyber law due diligence requirements and Internet intermediary liabilities. As a result they are violating the provisions of Information Technology Act, 2000.

In the absence of clear cut policies and guidance, e-health in India is facing legal roadblocks. Till now we do not have any dedicated e-health laws and regulations in India. The legal enablement of e-health in India is urgently required. In United States, the Health Insurance Portability And Accountability Act Of 1996 (pdf) and Health Information Technology for Economic and Clinical Health Act (HITECH Act), etc are some of the laws that take care of medico legal and techno legal issues of e-health and telemedicine. Laws like these are missing in India.

There is also a gross deficiency of data protection and privacy laws in India. Thus, private data and health records can be leaked by these online pharmacies with little grievance redressal and compensation mechanism. It is high time for Indian government to regulate illegal and unethical online pharmacies operating in India.

Friday, May 13, 2016

Amazon And Its Sellers Are Facing Investigation In India For Falsely Claiming Central Value Added Tax (Cenvat) Credit

E-commerce is a relatively new concept in India and as such various aspects related to it are still developing. One such aspect is legal issues associated with e-commerce in India especially with conflict of laws issues. E-commerce laws in India are still maturing as we have basic level legal framework regarding e-commerce in India as incorporated in the Information Technology Act, 2000 (IT Act 2000). However, there is no clarity regarding legal or illegal usage of e-commerce platforms in India as on date.

Recently, the Indian government clarified about the Foreign Direct Investment (FDI) in E-Commerce Sector of India. But FDI and taxation related violations are still happening in India as Indian government has not taken a firm stand in this regard. A software for calculating e-commerce exports was also developed by Indian government. Nevertheless, legal violations by big e-commerce platforms of India still continues especially for online pharmacies, telemedicine, online gambling, e-health, m-health, internet of things (IoT), etc. E-commerce disputes resolution is another area that requires urgent attention of Indian government. Technology driven initiatives like e-courts and online dispute resolution (ODR) must be encouraged by Indian government for resolution of e-commerce disputes in India.

Now it has been reported that Amazon and 50 of its sellers are facing investigations for allegedly falsely claiming Central Value Added Tax (Cenvat) credit and evading tax of about Rs 118 crore. Aggregators such as Amazon pay service tax to the seller. Some sellers had not deposited the service tax with the government even after claiming it from the e-commerce giant. The Directorate General of Central Excise Intelligence (DGCEI) is investigating the matter. Traders are alleged to have misused the Cenvat scheme, which allows a manufacturer or service provider a relief from the taxes paid on inputs to manufacturing of final products or services. DGCEI had detected that bogus invoices of declared goods were issued to merchants through dummy firms. Verifications revealed that the firms said to be providing the goods were non-existent.

Officers of the DGCEI have conducted search operations at Amazon's business premises across the country and at its headquarters in Bengaluru, in January. "So far, the total tax evasion we have been able to establish is to the tune of Rs 118 crore, which could increase. We will soon issue show cause notices to respective sellers," a senior officer said. "We have recorded the statement of Amazon executives and are assessing the details provided by them," he added. Amazon India has confirmed that the DGCEI had raised some questions around their promotion programme. Amazon has cooperated with the authorities to the fullest extent and provided them with all the information that they needed. The DGCEI is also probing if Amazon had any involvement in the merchants claiming Cenvat credit.

Monday, April 25, 2016

E-Commerce Disputes In India Would Now Be Resolved Using Online Dispute Resolution (ODR) Mechanisms

Effective and timely dispute resolution is sine quo non for ease of doing business in any country. India has been facing the problem of mammoth backlog of legal cases that has overburdened the Indian judiciary to the extent of almost collapse. This scenario is going to worsen in near future as Indian government has been encouraging projects like digital India, make in India, startups India, etc. As these fields are new, they would give rise to litigation on the one hand and lack of knowledge about these techno legal issues on the part of lawyers and judges on the other hand.

Perry4Law Organisation (P4LO) has come out with some techno legal solutions to resolve these issues. It has launched unique techno legal projects on e-courts and online dispute resolution (ODR) in India. These projects can be utilised by Indian government, public sector undertakings (PSU), Indian companies, multi national companies (MNCs), national and international organisations, individuals, etc. One such segment that can use these techno legal service is the e-commerce industry of India. A prototype of a platform to resolve e-commerce disputes in India can be accessed here. We are working on a model that would utilise the existing and future techno legal experience of P4LO regarding resolving e-commerce disputes through ODR.

E-commerce has introduced significant choices for Indian consumers and customers. However, e-commerce in India has also given rise to many disputes by the consumers purchasing the products from e-commerce websites.

There is no formal e-commerce dispute resolution regulatory mechanism in India as we have no dedicated e-commerce laws in India. In fact, many e-commerce websites are not following Indian laws at all and they are also not very fair while dealing with their consumers. Allegations of predatory pricing, tax avoidance, anti competitive practices, etc have been leveled against big e-commerce players of India.

As a result, disputes are common in India that are not satisfactorily redressed. This reduces the confidence in the e-commerce segment and the unsatisfied consumers have little choice against the big e-commerce players. At a time when we are moving toward global norms for e-commerce business activities, the present e-commerce environment of India needs fine tuning and regulatory scrutiny. In fact, India is exploring the possibility of regulation of e-commerce through either Telecom Regulatory Authority of India (TRAI) or through different Ministries/Departments of Central Government in a collective manner.

It is obvious that e-commerce related issues are not easy to manage. E-commerce disputes resolution is even more difficult and challenging especially when Indian Courts are already overburdened with court cases. Of course, establishment of e-courts in India and use of online dispute resolution (ODR) in India are very viable and convincing options before the Indian Government.

To make ODR a success in India, Techno Legal Centre of Excellence for Online Dispute Resolution (ODR) in India (TLCEODRI) has been providing its techno legal ODR services to national and international stakeholders. TLCEODRI has now decided to manage e-commerce disputes resolution in India through its techno legal ODR platform. To implement this initiative in a smooth manner, an ODR Discussion Forum has been started by TLCEODRI.

We have also started a dedicated Board/Thread at the ODR Discussion Forum for E-Commerce Dispute resolution In India through ODR (registration required). This is a good opportunity for e-commerce websites of India and abroad to get good techno legal insight about Indian laws and their implementation to e-commerce field.

The access and registration to this Board is allowed to e-commerce websites alone that have already been established and are operating in India. Our existing e-commerce clients and other clients can contact us for immediate activation of their accounts while the registration request of other e-commerce websites would be duly approved/disapproved by our moderators/administrators. If an e-commerce websites is engaging us for our techno legal services, it would be granted immediate access to this segment at its request.

Very soon we would introduce additional features for e-commerce companies and online consumers. This would also include online filing of complaints and grievance by the consumers and other aggrieved individuals/companies against the e-commerce companies of India and abroad. Such complaints and grievances would be openly available for public access to general public, regulatory authorities and other e-commerce stakeholders.

We would also introduce a system where grievance can be managed by the e-commerce companies/websites and their consumers through multiple dispute resolution processes and stages of TLCEODRI. This would include conciliation, mediation and arbitration through ODR mechanisms. Please check our ODR Discussion Forum for regular updates about the ODR services of TLCEODRI.

Saturday, April 16, 2016

Software For Calculating E-Commerce Exports Developed By Indian Government

Indian government has been streamlining e-commerce and activities related to the same for the past one year. Initially an e-commerce friendly foreign direct investment policy was formulated by Indian government. The same may be accessed at Consolidated FDI Policy Circular Of 2015 By DIPP (pdf). Then guidelines were issued to further clarify the e-commerce related business activities in India. The same can be accessed at Guidelines For Foreign Direct Investment (FDI) On E-Commerce 2016 Series (pdf).
Now Indian government is testing a software that intends to capture crucial data related to export of e-commerce related goods and services in India. Indian government has already indicated that it would impose tax on online transactions happening in India for certain cases. For instance, according to the Budget announcement, any person or entity that makes a payment exceeding Rs 1 lakh in a financial year to a non-resident technology company will now need to withhold 6% tax on the gross amount being paid as an equalisation levy.
The said rule is applicable when the payment is made to companies that don't have a permanent establishment in India. This tax, however, is only applicable when the payment has been made to avail certain B2B services from these technology companies. Specified services include online and digital advertising or any other services for using the digital advertising space. This list, however, may be expanded soon.
Indian government now plans to tap data on overseas online sales as part of efforts to boost outbound shipments through e-commerce platforms and channel benefits to these dedicated exporters. Indian government has made a software for e-commerce exports that would capture data for further action and policy decisions. This would benefit small exporters as customised solutions can be then provided to them by Indian government. Presently the value of items shipped through couriers is often not captured in export data because they are categorised as samples or gifts. These are labeleled as samples because under the normal export channel exporters have to file shipping bills and are subject to checks by custom officials, which is cumbersome, especially for small exporters with low-value shipments. The software intends to mitigate these rigours and further help in claiming duty drawbacks for e-commerce exports. To give benefits to small exporters, the director general of Foreign Trade has defined "e-commerce" as the buying and selling of goods and services, including digital products, conducted over digital and electronic networks.
These steps are being introduced a year after the government provided export incentives to the shipment of goods through couriers or foreign post offices using e-commerce in the Foreign Trade Policy of 2015-2020. At present, exports that can avail of these sops are capped at Rs 25,000 per consignment, a value considered small for such purchases. Moreover, only six product categories i.e. handicrafts, handlooms, toys, customised fashion garments, books and leather footwear are entitled to these incentives under the Merchandise Exports from India Scheme (MEIS).
Source: E-Retailing Laws.

Foreign Direct Investment (FDI) In E-Retailing Sector Of India 2016 Series

India is presently witnessing an e-retailing era. This is a golden time for e-retailing entrepreneurs who have multiple domains to explore. This is also a challenging period for the Indian government that is clearly struggling to deal with technology related issues. Some of these issues include taxation of online transactions by companies like Google, foreign direct investment (FDI) regulations for e-retailing companies, techno legal framework for online businesses, cyber security issues of e-retailing businesses in India, e-commerce dispute resolutions, etc.

As per the existing FDI policy, contained in the "Consolidated FDI Policy Circular 2015" (pdf) (FDI Policy) as amended from time to time, FDI up to 100% under automatic route is permitted in Business to Business (B2B) e-commerce. No FDI is permitted in Business to Consumer (B2C) e-commerce. However, FDI in B2C e-commerce is permitted if certain conditions are fulfilled.

However, companies are violating these norms by accepting FDI by citing different purposes for the use of such FDI money. Both the Reserve Bank of India (RBI) and Enforcement Directorate (ED) are aware of these issues but none of them has taken any action against the guilty individuals and companies. RBI is also maintaining a vigil over e-commerce gateway operators, many of whom store financial information about Indians on overseas servers, but is not imposing new stringent regulations on new form of transactions.

In other such developments, the Maharashtra’s FDA ordered filing of FIR against Snapdeal, its CEO Kunal Bahl, Directors and distributors for online sale of prescription drugs. There are many techno legal requirements to open online pharmacy stores in India that almost all e-retailing fail to adhere to. To deal with this nuisance, a dedicated online pharmacy law is needed for India. For some time it was believed that the Telecom Regulatory Authority of India (TRAI) may be given the task to regulate e-commerce in India. However, TRAI refused to take the additional responsibility in this regard.

As far as FDI is concerned, the documents titled Consolidated FDI Policy Circular Of 2015 By DIPP (pdf) and Guidelines For Foreign Direct Investment (FDI) On E-Commerce 2016 Series (pdf) would be helpful for detailed insight. However, Indian government must be ready for new challenges from global players. For instance, recently US sought trade rules for e-commerce and cloud computing under the WTO banner. Similarly, deep discounting and predatory pricing issues are also required to be resolved by Indian government. Taxation issues are already vexing Indian government for long. We hope that these issue would be resolved by Indian government very soon.

Thursday, March 31, 2016

Online Gaming Industry And Laws In India

Online gaming industry in India has seen promising trends in India in the year 2015. Online gaming entrepreneurs are also very enthusiastic about the future of online gaming industry in India. At Perry4Law Organisation (P4LO) we have been helping various online gaming entrepreneurs in complying with techno legal requirements of Indian and other jurisdictions. These include techno legal compliances about online poker, online rummy, fantasy games, mobile games, Internet games, e-sports, card games, lotteries in India, etc.

However, a disturbing trend of "legal violations" is fast dominating the online gaming industry of India. For instance, the fine line and distinction between online gambling and online gaming in India is not appreciated and understood by online gambling and gaming enthusiastics of India. As a result they are frequently prosecuted in India for violating online gaming and online gambling laws of India. Even technical mechanisms are also used to curb such activities in restricted territories or zones. For instance, the Andhra Pradesh CID has requested the Cert-In to block Playwin/s website in AP on the ground of prohibition of online gambling in AP. In the past, Kerala refused permission to Future Gaming Solutions India Private Ltd to sell Nagaland lotteries in the state.

We have very specific and unique online poker laws and regulations in India. Whether by design or ignorance, online poker websites in India are violating these laws of India. Many online poker players in India also play the same in active violation of the laws of India in this regard. Most of them are not even aware whether playing online poker in India is legal or illegal. Further, taxability of online poker websites of India is another crucial issue that is frequently ignored by poker entrepreneurs. The laws and regulations for online gambling and online gaming in India must be religiously followed by all the stakeholders in their own interest.

Both online gaming and online gambling market of India is fast booming and maturing. Entrepreneurs in these fields have started exploring Indian markets to establish their ventures in India. Some of them have even established their businesses in neighbour countries like Nepal and Sri Lanka so that the moment Indian market is liberalised they can easily establish their venture in India. Amazon is also targeting home entertainment segment as it bought Videogame Studio Double Helix Games.

Mobile games have also become popular world over, including India. The market size for online games and mobile games is tremendous. There are very few players as on date in the mobile gaming industry of India. However, these players have to resolve many techno legal issues before they can establish their businesses in India. These include mobile payment compliances, payment gateway and POS terminal service due diligence, websites development compliances, Internet intermediary obligations, cyber law due diligence (PDF), etc. Presently many mobile application developers are violating Indian laws and may be prosecuted in the near future.

Perry4Law strongly recommends that online and mobile gaming entrepreneurs and businesses in India must ensure techno legal compliances before launching their respective ventures in India. Avoiding these techno legal compliances would prove counter productive in the long run.

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