Varun Dhawan
The Goods & Service Tax (GST) Bill proposes to bring e-commerce entities within the GST net to collect tax at source for all suppliers as well as file a monthly statement of transactions with every supplier. A brief note on the compliance on e-commerce operators is as under:
‘aggregator’ means a person, who owns and manages an electronic platform, and by means of the application and a communication device, enables a potential customer to connect with the persons providing service of a particular kind under the brand name or trade name of the said aggregator;
‘electronic commerce’ shall mean the supply or receipt of goods and / or services,or transmitting of funds or data, over an electronic network, primarily the internet, by using any of the applications that rely on the internet, like but not limited to e-mail,instant messaging, shopping carts, Web services, Universal Description, Discovery and Integration (UDDI), File Transfer Protocol (FTP), and Electronic Data Interchange (EDI),whether or not the payment is conducted online and whether or not the ultimate delivery of the goods and/or services is done by the operator;
‘electronic commerce operator’ (hereinafter referred as ‘e-commerce operator’) shall include every person who, directly or indirectly, owns, operates or manages an electronic platform that is engaged in facilitating the supply of any goods and/or services or in providing any information or any other services incidental to or in connection there with but shall not include persons engaged in supply of such goods and/or services on their own behalf.
Tax Collection at Source
It states that the e-commerce operator shall, at the time of credit or payment, (whichever is earlier) ofany amount to the account of the supplier of goods and/or services collect an amount at a rate to be notified, out of the amount payable or paid to the supplier towards consideration for the supply of goods and /or services made through it.
Mode of Payment
The same would apply whether or not the payment is made by cash or any other mode.
Time of Depositing the Tax
The e commerce operator shall deposit the tax so collected to the credit of the appropriate Government within 10 days after the end of the month in which such collection is made.
Monthly Statement
The e-commerce operator shall also furnish a monthly statement, electronically, of all amounts collected towards outward supplies of goods and/or services effected through it, during a calendar month.
The said monthly statement shall contain, inter alia, the details of the amount collected on behalf of each supplier in respect of all supplies of goods and/or services effected through the e commerce operator.
Based on such monthly statement filed by the e-commerce operator, the concerned supplier shall get credit, in his electronic cash ledger.
Matching of Monthly Statement
The details of supplies furnished by the ecommerce operator in the monthly statements shall be matched with the corresponding details of outward supplies furnished by the concerned supplier in his valid return for the same calendar month or any preceding calendar month.
Discrepancies in Two-way match
Where the details of outward supply, on which the tax has been collected, as declared by the e-commerce operator do not match with the corresponding details declared by the supplier, the discrepancy shall be communicated to both persons.
The value of a supply relating to any payment in respect of which any discrepancy is communicated and which is not rectified by the supplier in his return for the month in which discrepancy is communicated will get added to the output liability of the said supplier, in the succeeding calendar month.
The concerned supplier shall be liable to pay the tax payable along with interest on the amount so added from the date such tax was due till the date of its payment.
Calling for Information
The Joint Commissioner or any authority above, may by notice either before or during the course of any proceeding under the GST Act, require the e-commerce operator to furnish details relating to—
(a) supplies of goods and/or services effected through such e-commerce operator during any period, or
(b) stock of goods held by the suppliers making supplies through such e-commerce operator in the godowns or warehouses, by whatever name called, managed by such e-commerce operators and declared as additional places of business by such suppliers.
The e-commerce operator shall furnish the required information within five working days of the date of service of such notice.
Any person who fails to furnish the information required by the notice served under sub-section (10) shall be liable to a penalty which may extend to rupees twenty-five thousand, without prejudice to any other action as prescribed.
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Draft GST Law
NDA government has just released , DRAFT GST LAW , for consultations among stake-holders
In the matter of ” E-Commerce transactions ” , the draft proposes :
“….. a tax collection at source for E-Commerce companies ”
MINT ( 15 June 2016 ) interprets this as follows :
” This means that any payment made to a supplier by an E-Commerce company will be subject to tax collected at source ”
In the matter of ” Intangible and Works Contract to be classified as Services ” , it says :
” The law classifies intangibles such as software and works contract as Services ”
MY TAKE :
A Commerce by any other name ( including ” E Commerce ” ) , is still sale of ” Goods / Services ” by a Seller , in exchange of ” Value ” , ( usually money – when that exchange is not a Barter Deal ) , received from the Buyer
E – Commerce ” is nothing more than ” Commerce ” , where such exchange of values , take place electronically , as opposed to physically . It still remains Commerce , even when perceptions differ
Hence , regulations / controls / taxation etc that govern E-Commerce should , essentially remain the same as in case of Commerce
Mere elimination of an intermediary ( Distributor / Wholesaler / Dealer / Agent / Stockist etc ) , from the ” Supply Chain ” , itself cannot be the determining criteria
Take a look at the various parameters of ” Commerce ” outlined in my following blog of 15 Sept 2015 :
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Not an easy task to define what is E Commerce ( and what is not ), considering all the possible permutations / combinations ( running into LAKHS of them ! ) , of the following elements :
# NATURE
* A physical ” Product ” ( Capital Goods / FMCG / Consumables / Perishables )
* A virtual ” Service ” ( Medical advice / Legal advice / Consultancy / Software etc )
# GEOGRAPHIC SPREAD
* Across National boundaries ( International Trade )
* Across State boundaries ( within India )
* Across Municipal boundaries (within a State )
# SUPPLY- CHAIN / INTERMEDIARIES
* Mfr > Distributor > Dealer > Retailer > Buyer
* Mfr > Buyer
* Any disintermediation in the above chain
# ORDER PLACEMENT / ACCEPTANCE
* In a physical location ( Shop / Store / Office / Factory / Home )
* In a virtual location (Web site/Mobile App/SMS/ Email / Phone / Video Conference )
# DELIVERY
* Physically in a Shop / Store etc where Buyer collects / picks-up from shelf
* Delivered to Buyer’s location, thru Delivery Boy
* Delivered to Buyer’s location, using a Drone
* Delivered to Buyer on his home-based 3D Printing Machine ( using internet )
# PAYMENT
* Cash against delivery
* Pre-paid / Post-paid Cheque
* Credit / Debit Cards across counter
* Credit / Debit Cards thru online Payment Gateways
* Through Mobile Wallets
* Electronic Bank Transfer
* Using Virtual Currency like Bit-Coins
* Barter of Goods or Services
# FOREIGN INVESTMENTS
* FDI in Manufacturing / Supply Chain / Payment Gateways – Apps- Mobile Wallets
* FDI in Web sites like Amazon – Flipkart – Alibaba – Snapdeal etc ( What percentage ? )
Can you think of any other ” Elements ” that I have forgotten ?
In any case , given the fact that there can be lakhs ( if not millions ) of permutations / combinations of the above-mentioned elements , one must not attempt to define what is E Commerce ( and what is not ) , by inclusion or exclusion of these elements in definition
Such a complex definition would lead to thousands of court cases involving Governments and each court interpreting the definition , differently !
The only definition that would satisfy ALL of these permutations / combinations , is :
Any exchange of ” Value ” between any number of parties , involving ,
> Goods or Services , on the part of one party
with,
> Money or its equivalent consideration , on the part of a second party
with or without using,
> Intermediary services , on the parts of any other parties
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I hope the ” DRAFT GST LAW ” refrains from defining ” E Commerce ” separately – and as distinct from plain vanilla commerce
GST Law must adopt a BROAD / ALL-ENCOMPASSING , definition of ” Commerce ”
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17 June 2016