E-commerce simply means buying and selling of goods or services or both by using electronic platform, primarily the internet which is advantageous to organizations, customers and society as a whole.
Electronic commerce is defined under clause 44 of section 2 of Central GST Act, 2017 as under:
“Electronic commerce means the supply of goods or services or both, including digital products over digital or electronic network”.
E-commerce has bridged the gap between service provider and service recipient in a most cost and time effective manner. Earlier only two parties were involved in a transaction but in present scenario e-commerce operator plays a major role and has emerged as the third party in a transaction which is why it was imperative to bring the e-commerce operator within the ambit of GST.
“Electronic commerce operator as defined under clause 45 of section 2 of Central GST Act, 2017 means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce”.
In this article we would discuss following categories of services as notified through Notification No. 17/2017 of Central GST Act, 2017 and Notification No. 14/2017 of Integrated GST Act, 2017 by the central government and the tax on supply of such services shall be paid by the e-commerce operator and all the provisions of GST shall apply on the e-commerce operator.
Chargeability of Services of E-commerce operator to GST is governed by Section -9(5) of Central GST Act, 2017 for intra-state supplies and Section -5(5) of Integrated GST Act, 2017 for inter-state supplies.
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I. Services by way of transportation of passenger:
An e-commerce operator such as Ola, Uber, etc. provides services of transportation of passenger by a Radio Taxi. Similarly other players provide such service using different means such as Motor cab, Maxi cab, Motor Cycle, etc.
In this case, Ola or Uber acts as an intermediary between the local cab vendors and the actual recipient of the taxi service. Now , to disguise the fact that actual supplier is the local vendor, the act specifies that the e-commerce operator shall be the supplier of service and accordingly all the provisions of the act shall apply to such operator as if he is the supplier liable to pay tax in respect of such services.
II. Services by way of accommodation in hotels, guest house, club, etc.:
We can take example of players like OYO, Make My Trip, etc. who are majorly involved in providing services by way of accommodation in hotels, guest house, clubs, etc. Two situations may arise in this type of service which is as follows:
a) Where the actual supplier is not liable to get registered under GST:
Here in this case the actual supplier has been kept in disguise and only one transaction takes place between e-commerce operator and the actual recipient and the e-commerce operator shall be the supplier of service by way of accommodation and accordingly all the provisions of the act shall apply to such operator as if he is the supplier liable to pay tax in respect of such services.
b) Where the actual supplier is liable to get registered under GST:
Number of transactions involved in this case shall be two. First transaction takes place between actual supplier, i.e. owner of hotel and the actual recipient which shall be classified as accommodation service and the second transaction involved is of commission agent between actual supplier and e-commerce operator. GST shall be levied in each of the transaction separately in accordance with the provisions of the act.
III. Services by way of Miscellaneous Utilities such as house-keeping, plumbing, carpentering, etc.:
We can take example of Urban clap, House joy, etc. who is majorly involved in providing services by way of miscellaneous utilities at the doorstep of the service recipient. Two situations may arise in this type of service which is as follows:
a) Where the actual supplier is not liable to get registered under GST:
Here in this case the actual supplier has been kept in disguise and only one transaction takes place between e-commerce operator and the actual recipient and the e-commerce operator shall be the supplier of service by way of miscellaneous utilities and accordingly all the provisions of the act shall apply to such operator as if he is the supplier liable to pay tax in respect of such services.
b) Where the actual supplier is liable to get registered under GST:
Number of transactions involved in this case shall be two. First transaction takes place between actual supplier, i.e. carpenter or plumber, etc. and the actual recipient which shall be classified as service by way of miscellaneous utilities and the second transaction involved is of commission agent between actual supplier and e-commerce operator. GST shall be levied in each of the transaction separately in accordance with the provisions of the act.
In all the above cases, where e-commerce operator does not have a physical presence in the taxable territory i.e. the place where the provisions of the act apply, any representative of such operator is liable to pay tax. Further if the operator does not have a representative in such territory then it is mandatorily required to appoint a person who shall act as a representative and will be liable to pay tax on the services provided by the e-commerce operator.
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