Electronic commerce operator under GST

E-commerce and E-commerce operator plays a vital role in present market scenario. the related provisions applicable on E-commerce operator under GST are as follows:-

Definition of Electronic Commerce and Electronic Commerce Operator :

“Electronic commerce” means the supply of goods or services or both, including digital products over digital or electronic network – section 2(44)

“Electronic commerce operator” means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce – section 2(45)

Registration of e-commerce operator: The Registration provisions for E-commerce operator or the person supplying through E-commerce platform are as follows:

Compulsory Registration for ECO: Every electronic commerce operator irrespective of his turnover, has to compulsorily register as per provisions of section 24(x) of CGST Act, 2017. This registration is in addition to and separate from GST registration obtained as normal supplier.

Compulsory Registration for person supplying through ECO: Persons who supply goods or services or both, other than supplies specified u/s 9(5), through such electronic commerce operator who is required to collect tax at source under section 52 has to compulsorily register as per provisions of section 24(ix).

However, the persons making supplies of services, other than supplies specified under subsection (5) of section 9 is allowed to take benefit of threshold limit vide Notification No. 65/2017 – Central Tax dt 15/11/2017.

Restriction on Composition dealer: Person who is engaged in making any supply of goods through an electronic commerce operator who is required to collect tax at source under section 52 can’t take registration under composition scheme u/s 10. (Sr Nos 6 and 16 of FAQ released by Law Committee of GST Council on 28-9-2018.)

Registration of foreign Electronic Commerce Operator – Foreign Electronic Commerce Operator is required to obtain registration under GST. Such foreign e-commerce operator would be liable to collect TCS on such supply and would be required to obtain registration in each State/UT. If the foreign e-commerce operator does not have physical presence in a particular State/UT, he may appoint an agent on his behalf – (Sr No 8 of FAQ released by Law Committee of GST Council on 28-9-2018.)

State wise Registration : Electronic Commerce Operator is required to obtain GST Registration in each State If he has suppliers in different States. However, he can indicate his head office as place of business and file all the returns through HO , if he does not have place of business in that State. (Sr Nos 5 to 7 of FAQ released by Law Committee of GST Council on 28-9-2018.)

Application Form for Registration : E Commerce operator need to file Form GST REG 07. Part A of the form shall indicate the name of the State where TCS is required to be collected but he does not have physical presence and Part B of the form will indicate name of State of his principal place of business . (Rule 12(1A) of CGST Rules inserted w.e.f. 31-12-2018.)

Certificate of Registration : The proper officer may grant registration after due verification and issue a certificate of registration in form GST REG-06 within a period of three working days from the date of submission of the application – rule 12(2) of CGST Rules.

Cancelation of Registration : The registration can be cancelled after notice, enquiry and hearing. The cancellation shall be communicated to the said person electronically in form GST REG-08 – rule 12(3) of CGST Rules.

Place of Supply : As per section 12(11) of the IGST Act, 2017 ,place of supply for e-commerce operator for recharge of talk time of the Telecom Operator / recharge of DTH / in relation to convenience fee charged from the customers on booking of air tickets, rail supplied through its online platform shall be the address on record of the customer with the supplier of services . (Sr No 27 of FAQ released by Law Committee of GST Council on 28-9-2018.)

Specified Services u/s 9(5) of CGST Act and u/s 5 (5) of IGST Act : In respect of specified services, tax shall be paid by the ECO on behalf of the service suppliers if such services are supplied through it and all the provisions of the Act shall apply to such ECO as if he is the supplier liable to pay tax in relation to the supply of such services. The Government has notified following categories of services, the tax on intra-State/ inter-state supplies shall be paid by the ECO –

Furthermore, above mentioned suppliers of services covered u/s 9(5) are exempted from compulsory registration and can take benefit of threshold limit.

Collection of tax at source (Section-52) : Every electronic commerce operator, not being an agent, shall collect TCS at such rate not exceeding 1% (1% CGST + 1% SGST), of the net value of taxable supplies made through it by other suppliers where the consideration with respect to such supplies is to be collected by the operator. Provision of Tax Collected at Source (TCS) has been introduced w.e.f. 1-10-2018. The rate for TCS is 1% for IGST for inter-state taxable supply –(Notification No. 02/2018-IT dated 20-9-2018)

Meaning of ‘Net value of taxable supplies’ – The expression “net value of taxable supplies” shall mean the aggregate value of taxable supplies of goods & services (other than services notified under section 9(5) of CGST Act,) made during any month by all registered taxable persons through the operator reduced by the aggregate value of taxable supplies returned to the suppliers during the said month – Explanation to section 52(1) of CGST Act.

The Net Value of Taxable supplies will be calculated at GSTIN level and not at gross level. In other words, net supplies are to be calculated for each supplier separately –( Sr Nos 10 and 11 of FAQ released by Law Committee of GST Council on 28-9-2018.)

No TCS shall on NIL Value If in a particular month, the sale returns are more than supplies made, there will be no TCS for that month. However, such negative figure will not be carried forward. Hence, such shortage cannot be adjusted in next month – Sr No 20 of FAQ released by Law Committee of GST Council

Basis for TCS – The TCS by electronic commerce operator shall be on billing basis and not on collection basis – (Sr No 11 of FAQ released by Law Committee of GST Council on 28-9-2018.)

Non Applicability of TCS Provisions : TCS provisions are not applicable where GST is payable under reverse charge. TCS provisions also do not apply in case of exempt supply – Sr Nos 14 and 15 of FAQ released by Law Committee of GST Council on 28-9-2018.

TCS provisions do not apply on import of goods or services – Sr No 17 of FAQ released by Law Committee of GST Council on 28-9-2018

There is no TCS if you are selling your own products through electronic portal – FAQ on GST Chapter 8 Q No. 34 issued by CBI&C on 15-12-2018

Payment of TCS by cash and not through ITC – The payment of tax collected at source is to be made through electronic cash ledger only within 10 days from close of month. Payment of TCS amount cannot be made through electronic credit ledger – (Sr No 19 of FAQ released by Law Committee of GST Council on 28-9-2018.)

ECO should make the tax collection during the month in which the consideration amount is collected from the recipient. The amount of TCS collected by the ECO is to be deposited to the Government and ECO is required to furnish a statement in Form GSTR-8, electronically within 10 days after the end of the month in which amount was so collected.

Annual Return – The e-commerce operator is required to file Annual Statement before 31st December of following financial year, giving specified details – section 52(5) of CGST Act.

Every e-commerce operator required to collect tax at source under section 52 of CGST Act shall furnish annual statement in Form GSTR-9B – Rule 80(2) of CGST and SGST Rules, 2017.

Levy and collection

Every e-commerce transaction involves below three parties and two types of transactions:

1. Seller;

2. Buyer;

3. ECO.

Types of transaction:

1. Between Seller & Buyer – Sale of Goods ;

2. Between Seller & ECO – Provision of market place

GST shall be levied on both transactions:

Between seller & buyer: GST on entire value of goods/ services supplied (GST shall be paid by the supplier except in case of services specified u/s9(5))

Seller & ECO: GST on commission value/ other charges earned by ECO for providing market platform to seller. (GST shall be paid by the ECO)

Matching of statement of e-commerce operator and credit taken by supplier – The details of supplies and the amount collected furnished by e-commerce operator shall be matched with the corresponding details of outward supplies furnished by the concerned supplier registered under CGST, in prescribed manner- section 52(8) of CGST Act.

Discrepancy between the details of operator and supplier – Where the details of outward supply, on which the tax has been collected, as declared by the operator do not match with the corresponding details declared by the supplier under section 37 or section 39, the discrepancy shall be communicated to both persons in prescribe manner- section 52(9) of CGST Act. The words in italics inserted vide CGST (Amendment) Act, 2018 w.e.f. 1-2-2019.

If the discrepancy is not rectified, it shall be added to the output liability of the said supplier for the calendar month succeeding the calendar month in which the discrepancy is communicated.

The concerned supplier shall be liable to pay the tax payable in respect of such supply along with interest on the amount so added from the date such tax was due till the date of its payment – section 52(10) of CGST Act.

Export through post by e-commerce operators : E-commerce operators can export goods through Foreign Post Office (FPO). These exports will be zero rated. Declaration is to be filed in PBE-1 (Postal Bill of Export -I). Exports by e-commerce operators can be from any foreign post office. However, exports under MEIS can be only from Foreign Post Offices at Delhi, Mumbai and Chennai. Details procedure has been specified in CBI&C circular No. 14/2018-Cus dated 4-6-2018.

In case of small value consignments, single payment is received by exporters from e-commerce companies. In such cases, multiple shipments addressed to multiple consignees are permitted under PBE-II (Postal Bill of Export-II) – MF(DR) circular No. 18/2018-Cus dated 13-06-2018

(Republished with Amendments. Amendments been made by CA Anita Bhadra)