Introduction
E – Commerce Industry is gaining its importance nowadays as lot of people prefer online shopping, booking hotels and any services through online due to its convenient usage and saving in time which is available in just click of a button. What about GST aspect in E – Commerce Industry? Let’s discuss this in detail in this article.
Body of Content
Who is an E – Commerce Operator?
As per section 2(45), “E – Commerce Operator” means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce.
What is E – Commerce?
As per Section 2(44), “E – Commerce” means the supply of goods or services or both, including digital or electronic facility or platform for electronic commerce.
Section 9(5) of CGST Act
The extract of the section is as follows:
The Government may, on the recommendations of the Council, by notification, specify categories of services the tax on intra – state supplies of which shall be paid by the electronic commerce operator if such services are supplied through it, and all the provisions of this Act shall apply to such electronic commerce operator as if he is the supplier liable for paying the tax in relation to the supply of such services:
Specified Category of services
The Central Government through Notification No. 17/2017 – Central Tax (Rate) dated 28.06.2017 and Notification 23/2017 – Central Tax (Rate) dated 22.08.2017 has notified the following categories of services.
(i) Services by way of transportation of passengers by radio taxi, motorcab, maxicab and motor cycle, omnibus or any other motor vehicle [Notification No. 17/2021 CT (Rate) dated 18th Nov 2021]
(ii) Services by way of providing accommodation in hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes, except where the person supplying such service through electronic commerce operator is liable for registration under sub – section (1) of section 22 of the said Central Goods and Services Tax Act.
(iii) Services by way of house – keeping, such as plumbing, carpentering etc, except where the person supplying such service through electronic commerce operator is liable for registration under sub – section (1) of section 22 of the said Central Goods and Services Tax Act.
Clause (iv) is inserted vide Notification No. 17/2021 CT (Rate) dated 18th Nov 2021
“supply of restaurant service other than the services supplied by restaurant, eating joints etc. located at specified premises”
Specified Premises
Specified premises means premises providing hotel accommodation service having declared tariff of any unit of accommodation above seven thousand five hundred rupees per unit per day or equivalent
Analysis
When we analyse the notified services, we get to know that
1. In case of 1st service – services by way of transportation of passengers by radio taxi, motorcab, maxicab and motor cycle, it is very clear that the E – Commerce Operator shall be liable to pay tax irrespective of the turnover of the supplier of service.
Example: Ola, Uber
Whether all E – Commerce Operators providing services by way of transportation of passengers by radio taxi, motor cab, maxicab and motor cycle required to register and pay tax?
The answer is yes. Though section 22(1) mentions the threshold limit for registration as Rs. 20 Lakhs (Rs. 10 Lakhs in case of Special Category States) this service is covered under section 24(iv) which speaks about Compulsory registration. Hence the E – Commerce operator providing services notified under section 9(5) is compulsorily required to obtain registration and pay tax.
2. In case of the 2nd service where supplier provides accommodation service through E – Commerce Operator, then E – Commerce Operator is liable to pay tax only when the supplier is not liable to register under section 22(1).
Section 22(1) speaks about the threshold limit for registration. If the supplier’s Aggregate Turnover exceeds Rs. 20 Lakhs (Rs. 10 Lakhs in case of Special Category States) then supplier is required to register and pay tax and not the E – Commerce Operator.
Example:
Mr. A is providing service by way of accommodation in hotel in Chennai through Oyo.
(i) Aggregate Turnover of Mr. A in FY is 15 Lakhs.
(ii) Aggregate Turnover of Mr. A in FY is Rs. 25 Lakhs
Answer
(i) Oyo is required to pay tax as Mr. A is not required to register u/s 22(1) as his Aggregate Turnover in FY does not exceed Rs. 20 Lakhs.
(ii) Mr. A is required to pay tax as he is required to register u/s 22(1) since his Aggregate Turnover in FY exceeds Rs. 20 Lakhs.
3. In case of the third service, where supplier provides services by way of house – keeping, such as plumbing, carpentering etc through E – Commerce Operator, then E – Commerce Operator is liable to pay tax only when the supplier is not liable to register under section 22(1).
Section 22(1) speaks about the threshold limit for registration. If the supplier’s Aggregate Turnover exceeds Rs. 20 Lakhs (Rs. 10 Lakhs in case of Special Category States) then supplier is required to register and pay tax and not the E – Commerce Operator.
Example:
Mr. A is providing carpentering service in Chennai through Urban Clap.
(i) Aggregate Turnover of Mr. A in FY is Rs. 15 Lakhs
(ii) Aggregate Turnover of Mr. A in FY is Rs. 25 Lakhs
Answer
(i) Urban Clap is required to pay tax as Mr. A is not required to register u/s 22(1) as his Aggregate Turnover in FY does not exceed Rs. 20 Lakhs.
(ii) Mr. A is required to pay tax as he is required to register u/s 22(1) since his Aggregate Turnover in FY exceeds Rs. 20 Lakhs.
4. In case of 4th service, where supplier provides restaurant service through E – Commerce Operator, then E – Commerce Operator is liable to pay tax u/s 9(5)
Example 1
Saravana Bhavan is providing restaurant service through Swiggy.
In this case, Swiggy is liable to pay GST being the E – Commerce Operator as it is now covered u/s 9(5).
Example 2
Dominos is supplying food through its App “Dominos”
In this case, Dominos is liable to pay GST.
Whether threshold limit of Rs. 20 Lakh is available for E – Commerce Operator?
No. Since they are covered under section 24(iv) which speaks about Compulsory registration, the E – Commerce operator providing services notified under section 9(5) is compulsorily required to obtain registration and pay tax.
Services other than the services notified u/s 9(5) of CGST Act provided through E – Commerce Operator
Situation 1
Mr. A is dealing in supply of mobile phones. He developed his own website ABC.com. Through his website he gets order and supplies the goods. His Aggregate Turnover is Rs. 25 Lakhs.
Whether Mr. A is an E-Commerce Operator?
Yes.
Whether Mr. A is a supplier?
Yes.
Whether he is required to take two registrations? One for E-Commerce Operator and other one for supplier?
The answer is no. As he is not required to collect TCS because both are same person. He has to take only one registration u/s 22(1) as supplier of goods and pay tax.
Situation 2
Mr. A is dealing in supply of televisions in Chennai. He supplies through Flipkart. His Aggregate Turnover is Rs. 15 Lakhs.
Whether Mr. A is a supplier of Goods?
Yes.
Whether Mr. A is required to take registration?
Since his Aggregate Turnover is not exceeding Rs. 20 Lakhs he is not required to register u/s 22(1). But u/s 24(ix) –“persons who supply goods or services or both other than supplies specified under section 9(5), through such E – Commerce Operator who is required to collect tax at source u/s 52” he is required to compulsorily register irrespective of the turnover as section 24 overrides section 22(1) as section 24 is a non – obstante clause. It starts with the wordings “Notwithstanding anything contained in subsection (1) of section (22), the following categories of persons shall be required to be registered under this Act”.
Who is required to collect TCS u/s 52?
Every E – Commerce Operator, not being an agent, shall collect an amount calculated at 0.5% CGST and 0.5% 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.
“Net value of taxable supplies” shall mean the aggregate value of taxable supplies of goods or services or both, other than services notified u/s 9(5), made during any month by all registered persons through the operator reduced by the aggregate value of taxable supplies returned to the suppliers during the said month
Analysis 1
When we analyse the same, it means TCS will apply only when consideration in respect of supplies is to be collected by E – Commerce Operator.
When consideration is not collected by E – Commerce Operator, TCS will not apply.
Analysis 2
TCS provision does not apply to services notified u/s 9(5).
Whether Flipkart is liable to collect TCS u/s 52?
Yes. As consideration is collected by Flipkart
Whether Flipkart is liable to take registration?
Yes u/s 24 (x) – “Every E – Commerce Operator who is required to collect tax at source u/s 52”
Situation 3
Mr. A is a supplier of food. He is supplying through Swiggy. His Aggregate Turnover in FY is Rs. 15 Lakhs
1. Whether Mr. A is a supplier of service?
Yes
2. Whether he is liable to take registration?
Since his Aggregate Turnover is not exceeding Rs. 20 Lakhs he is not required to register u/s 22(1). Section 23(2) read with Notification No. 65/2017 – CT dated 15.11.2017 specifies “the persons making supplies of services, other than supplies specified under sub-section (5) of section 9 of the said Act through an electronic commerce operator who is required to collect tax at source under section 52 of the said Act, and having an aggregate turnover, to be computed on all India basis, not exceeding an amount of twenty lakh rupees in a financial year, as the category of persons exempted from obtaining registration”.
Since Mr. A is a supplier of service and his Aggregate Turnover does not exceed Rs. 20 Lakhs he is exempt from obtaining Registration.
3. Whether Swiggy is an E – Commerce Operator?
Yes.
4. Whether Swiggy is required to collect TCS u/s 52?
Yes. As the consideration for service is collected by Swiggy.
5. Whether Swiggy is required to obtain registration?
Yes. Under section 24(x) – every E – Commerce Operator who is required to collect tax at source u/s 52.
Registration for E – Commerce Operator required to collect TCS u/s 52
A Person required to collect tax at source in accordance with the provisions of section 52 shall electronically submit an application, duly signed or verified through EVC, in Form GST REG – 07 for the grant of registration through the common portal, either directly or through a Facilitation Centre notified by the Commissioner.
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.
Cancellation of Registration
Where, upon an enquiry or pursuant to any other proceeding under the Act, the proper officer is satisfied that a person to whom a certificate of registration in Form GST REG – 06 has been issued is no longer liable to deduct tax at source under section 51 or collect tax at source under section 52, the said officer may cancel the registration issued under sub – rule (2) and such cancellation shall be communicated to the said person electronically in Form GST REG – 08.
Returns to be filed by E – Commerce Operator
Every E-Commerce Operator who collects the amounts specified in section 52(1) shall furnish a statement electronically containing the details of outward supplies of goods or services or both effected through it, including the supplies of goods or services or both returned through it, and the amount collected under 52(1) during a month, in Form GSTR 8 within 10 days after the end of such month.
E – Commerce Operator shall also furnish an annual statement, electronically, containing the details of Outward supplies of goods or services or both effected through it, including the supplies of goods or services or both returned through it, and the amount collected under 52(1) during the FY, in Form GSTR 9B before 31st December following the end of the FY.
Form GSTR 9B is yet to be notified.
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The author ‘CA Deepika Ganesan’ can be reached at deepikaaganesan@gmail.com.
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