CA Vinod Kaushik
Meaning of E-Commerce:
Before we start to discuss the technical VAT aspects it is worth to mention the definition of e-commerce. Electronic commerce, commonly written as e-commerce, is the trading or facilitation of trading in products or services using computer networks, such as the Internet (From Wikipedia, the free encyclopedia). In recent time the transactions conducted through e-commerce have grown manifold and Govt. is little concerned on its taxation parts specially VAT. As per the definition given on internet any company which facilitates trading of goods and services over internet are called e-commerce. As per notification of Delhi VAT department following class of persons will fall in the definition of e-commerce entities:
- The companies/firms/L.L.Ps/ proprietorship concerns etc. may be acting as facilitators, directing the transaction to the dealer concerned for supplying the goods to the customer who has ordered for such supply.
- Supplying the goods directly to the customers from the godown maintained, managed and owned by such facilitating entities, where the goods of concerned dealer have already been stored.
Compliance under Delhi VAT for e-commerce:
It has been a very confusing question that the dealers who are selling goods through the web portal of other companies are liable to file form EC-I, II and III. The definition of E-commerce has been discussed in above paragraph which clearly states type of firms or companies which are liable to get enrollment in form EC-I and file quarterly return in form EC-II and EC-III. The one who sells the goods to customers through their own portal are normal dealers and are not liable to file form EC-I, II and III. The above discussion can be understood with the help of a simple example where Mr. X is a vendor who has listed his products on ebay.com and selling his products through this website, in this case Mr. X is a normal dealer in terms of section 2(1) (j) of Delhi Value Added Tax Act, 2004 and ebay.com is required to enroll in form EC-I and file respective return in form EC-II and EC-III. In this case Mr. X will file his normal return in form DVAT-16 and form 1 with annexure 1E on or before 28th day from the end of the quarter to which return pertains.
Circular No. 33 of 2015-16 dated 29-12-2015:-
The department has been receiving a number of queries from the dealers engaged in e- Commerce as to whether they are required to get themselves registered and file prescribed returns. Confusion also arose about dealers effecting sales of their own products through their own portals/ websites. It is hereby clarified that only the persons who are providing these e-portals/websites to other dealers for passing on the orders from customers to the dealers /other vendors are required to enroll and file the returns in terms of Notification dated 26/06/15 referred above. The confusion should no more persist in case ebay.com sells products directly to the customers without involvement of third party vendors. In this ebay.com has to file its normal return in the form discussed above.
Attention vendors/ fulfillment centers:-
With the return of third quarter of 2015-16 Govt. has prescribed annexure 1E which need to filed with the return of same quarter. Annexure 1E is basically prescribed to capture the information of sales made by these vendors through various e-commerce entities and later on some crosschecking will be done based on the data given in annexure 1E with the information furnished by e-commerce companies in form EC-II. Any mismatch in sales information may lead consequences against vendors who have willfully manipulated the data.
Concept of return of goods:-
In my last article on e-commerce an attempt was being made to decode the concept of return of goods and its treatment in returns and annexure. In this article once again an attempt is made to make the picture clear to my readers so that returns can be filed correctly with accurate information. The major e-commerce companies allow 100% return guarantee of goods in 15-20 days depending on the policy of each company but normally a standard time of 15 days is allowed. Where the goods has been returned by the customers to vendors through e-commerce entity in that case if the return is made in same quarter net figure of sales shall be reported by e.com in form EC-II or EC-III as the case may be. In case of return of goods after filing the return of a particular quarter revision in form EC-II and EC-III will be done to capture the net picture of same. The vendors who have supplied the goods will show the net of return figure in annexure 1E and later on revision will be made in the return if goods come back after filing the return.
A special cell has been created by department of trade and taxes to monitor the e-commerce entities and their fulfillment centers. A strong message is also coming from the department for those who are not paying due taxes and are involved in certain wrongdoing. Due caution must be exercised while filing the returns and annexure and return/rejection must be accounted properly.
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