PART IX

                            IS BITCOIN A COMMODITY?

According to Mr. Venugopal Badarawada, a life member of Bitcoin Foundation Inc(USA), who had sent a legal letter to the Reserve Bank of India (RBI) in January 2014 seeking clarification on its stance against virtual currencies & demanding a clear policy framework, Bitcoin is an “Electronic Document” as per Information Technology Act 2000/8 (ITA 2008) and hence carries “Legal Recognition”. If this “Legal Recognition” has to be removed, it would be necessary to amend ITA 2008 & therefore RBI has no rights to ban Bitcoins. Whether this electronic document is a “Currency” or a “Commodity” or a “Derivative” is left to the community to decide based on their perception on its usage. For want of a better description, it is better to consider Bitcoin (as in deed any Cryptocurrency) as a “Commodity in electronic form which the public may use for any legal purpose”. No other conclusion is logical.

The term commodity has not been defined anywhere under the law in India. In the case of Tata Consultancy Services V. State of Andhra Pradesh, Hon’ble Justice Sinha concurring with the court’s view stated, “computer software is intellectual property, whether it is conveyed in diskettes, floppy, magnetic tapes or CD ROMs, whether canned (Shrink-wrapped) or uncanned (customized), whether it comes as part of computer or independently, whether it is branded or unbranded, tangible or intangible; is a commodity capable of being transmitted, transferred, delivered, stored , processed , etc. and therefore as a ‘good’ liable To sale tax.” He also added that a commodity is generally understood to mean goods of any kind, something of use or an article of commerce.

Since bitcoin is basically a computer software & may come under the ambit of goods, it leaves open the possibility of being characterized as a commodity under Indian law.