WhatsApp Payment Service: SC Issues Notice On Plea Demanding Its Compliance With Indian Tax And IT Laws [Read Petition]

The Supreme Court on Monday issued notice to WhatsApp Inc as well as the Union Ministries of Law, Finance, and Electronics and Information Technology on a petition concerning its Payments Service.

The notice was issued by a Bench comprising Justice Rohinton Nariman and Justice Indu Malhotra on a petition filed by Delhi based think tank Centre For Accountability and Systemic Change (CASC) through Advocates PK Seth and Archana Pathak Dave, and argued by Advocate Virag Gupta.

CASC seeks compliance of WhatsApp with a circular issued by the Reserve Bank of India  (RBI) as well as with Rule 3(11) of Information Technology (Intermediary Guidelines) Rules, 2011.

The RBI circular, issued on 6 April, 2018, stipulates that in order to run a payment service in India, a company must have its offices and payments in India. This has been alleged to be violated by the instant messaging service company, considering that it is a foreign company having no offices or servers in India. Rule 3(11) of the 2011 Rules requires all intermediaries to appoint a Grievance Officer.

The petition contends that despite being the largest messaging platform in India, WhatsApp remains unregulated and is being allowed to continue with its payments services and other services “without any checks”.

It submits, “To open a bank account, a customer needs to comply with KYC norms and various other formalities. WhatsApp is a foreign company with no office or servers in India. To run Payments Service in India, WhatsApp is obligated to have its office and payments in India. Moreover, it is also required to have a Grievance Officer for users in India. Yet, it is being allowed to continue with its Payments and other services, without any checks.”

Highlighting the allegations against WhatsApp for fuelling the increased instances of lynching in the country, the petition in fact claims that the growth of rumour based crimes like lynching has been directly proportional to the growth of user base of messaging services like WhatsApp, which continue to remain unregulated.

It then avers that the messaging platform must be directed to comply with the Indian law, especially by appointing a Grievance Officer who would be able to address the concerns of the consumers as well as co-ordinate with investigating agencies.

It further asserts that non-payment of taxes in India by WhatsApp violates the freedom to undertake any business in the country under Article 19(1)(g) of the Constitution of India. It submits, “…the Respondent No. 6 [WhatsApp] does not pay any taxes in India, despite India constituting its largest user base, both in terms of users and time spent by them on the application. Government, by partnering with WhatsApp has given it added publicity, due to which it has added on more users, thereby increasing its valuation to Rs. 60,000 crore in India. Strangely, WhatsApp does not pay any tax in India, which is a violation of freedom to do business as given under Article 19(1)(g) of the Constitution.”

The petition alleges violation of Articles 21 of the Indian Constitution as well, with the submission, “…illegal services by WhatsApp are endangering the lives of Indians which violates Article 21 of the Constitution. Moreover, since Respondent No. 6 does not pay taxes in India, it adversely impacts the fundamental right of life of crores of Indians.”

With such assertions, the petition finally demands compliance of WhatsApp with Indian laws.

Read the Petition Here