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The Delhi High Court on Friday questioned why Facebook Inc is not paying any service tax when Google is doing so and directed the Centre to file a "better affidavit" on the issue.
"How is Google paying (service tax), but not Facebook? How is Facebook exempted? We are finding it difficult to understand," a bench of justices Badar Durrez Ahmed and Siddharth Mridul said.
The bench also asked whether the government was "alive" to the issues of sale of data by social medial sites as well as the service of targeted advertisement provided by them.
"Why don't you know all these? Are you alive to these things or is it beyond your comprehension," the court asked after advocate Virag Gupta, appearing for former BJP leader K N Govindacharya, raised these issues before the court.
The government, represented by advocate Sanjeev Narula, said that Facebook Inc has no office in India while Facebook India has a office in a Special Economic Zone from where it is exporting services and thus, they are exempted from paying service tax.
The bench, however, sought information from the government on what are the remittances being made to Facebook from India and whether the transactions between the website and various Indian companies are in the nature of services.
"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. File a better affidavit on the service tax as well as on the social media guidelines," the court said in the pre-lunch proceedings.
It also queried whether the government had come out with an email policy, however, as Narula was not present in court in the post-lunch period, the bench re-notified the matter to October 1 and requested the presence of Additional Solicitor General Sanjay Jain to assist the court on that date.