- At present, Goods are Services Tax [GST] has been imposed on “supply of goods & services”.
- GST is chargeable irrespective of mode of supply.
- It means mode can be orally, in writing or through e-communication.
- Thus, GST on e-commerce operator remains similar to any other mode of supply.
- There can be two models of e-commerce.
- One situation can be where the supplier himself supplying goods or services through e-commerce portal e.g. Certain fashion brands like Manyavar, Pantaloons etc.
- GST laws remains the same for the said supplier.
- Another model is the marketplace model of e-commerce e.g.Amazon, Zomato, flipkart, myntra etc.
- In this model, the e-commerce operator provides a platform to various suppliers.
- Two transactions are taking place in 2nd model : First, supplier supplying goods or services to the consumers and Second, the e-commerce operator supplying services to the supplier using their platform.
- These are distinct transactions, and attract GST separately.
- Liability to pay GST is on the supplier of service/Goods.
- Even in e-commerce transactions, the persons supplying goods or services through the platform are suppliers.
- Thus, a person selling the goods on Amazon, is supplier of goods and he is required to pay GST on those supplies.
- However, Section 9(5) of the CGST Act provides that the Government may, by notification, specify categories of services in intra-State supplies on which GST shall be paid by the electronic commerce operator, if such services are supplied through it.
- Three services i.e. (i) Motor Cab (ii) Hotels and accommodation and (iii) Housekeeping services has been notified u/s 9(5) of the CGST Act.
- It may be noted that under Section 9(5) of the CGST Act, only supply of services can be notified, where e-commerce operator can be made liable to pay tax on such supply.
- In a judgment of Opta Cabs Pvt. Ltd. [2019 (20) GSTL 161], Appellate authority of Advance Ruling held that when transportation of passenger service is provided by the taxi drivers by using a software application, the e-commerce operator is liable to pay GST even if payment is not directly received by the e-commerce operator.
- Thus e-commerce operators, engaged in providing services notified under Section 9(5) of the CGST Act are required to develop their model in such a way that they can discharge the GST liability.
- Thus, In case of supply of services, all suppliers of services are required to discharge its own GST liability, except the services notified under Section 9(5) of the CGST Act.
- Under Section 24 (ix) of the CGST Act, electronic commerce operators are required to be compulsorily registered, without any threshold exemption limit.
- However, Vide Notification No. 65/2017-C.T., dated 15-11-2017; the Central Government, exempted electronic commerce operator who has aggregate turnover, on all India basis, up to ₹ 20 lakh, in a financial year.
- Thus, persons supplying services other than those mentioned in Section 9(5) of the CGST Act are required to register and collect GST only if their turnover is more than ₹ 20 lakh in a financial year.
- Thus, Persons supplying services mentioned in Section 9(5) are not liable to be registered under GST even if their turnover is more than the threshold limit, as liability to pay GST is on the e-commerce operator.
- It is noted that the exemption has been provided from registration itself, and registration provisions are also applicable to IGST/SGST Act, and hence inter-state supplies are exempt from payment of GST on such supply of service upto threshold limit of exemption.
- Thus, persons supplying services through e-commerce operators enjoys threshold exemption limit.
- However, such benefit is not available to persons supplying goods through e-commerce operators. We are talking about goods here, be careful.
- Such suppliers of goods are required to get compulsorily registered under GST even if their turnover is less than the threshold limit.
- It means they are required to register in order to sell through the e-commerce platform.
- Commission Charged from Suppliers, falling under Tariff heading 9985, and shall attract GST @ 18%.
- E-commerce portals like Amazon, flipkart are required to be compulsorily registered under Section 24(ix) of the CGST Act.
- Commission Charged from Suppliers, falling under Tariff heading 9985, and shall attract GST at the rate of 18%, without availing any threshold limit.
- Suppliers can avail ITC on such GST charged as per the invoice raised.
- An electronic commerce operator is also required to collect tax (TCS) u/s 52 of the CGST Act.
- The provision imposes a duty on e-commerce operators to collect TAX from the amount payable to the supplier.
- However, it must be noted that TCS shall be deducted only when the supplier is liable to pay GST.
- TCS is not required to be collected on exempt supplies.
- For the purposes of TCS, an e-commerce operator has to obtain separate registration for TCS irrespective of the fact that it is already registered under GST.
- If such supplies are made from a location outside India, the supplier cannot be charged with GST payment liability.
- For example, a foreign manufacturer supplying goods to an importer in India. Though, that foreign manufacturer is supplier of goods, liability to pay GST is not on that foreign manufacturer. GST is paid by the importer located in India at the time of import.
- Similarly, when supplier of services supplies certain services to an Indian resident, liability to pay GST on such supply is on the person receiving the services under reverse charge method (RCM).
- OIDAR service is an exception. In case of Online Information and Database Access and Retrieval Service (OIDAR) services, the liability to pay tax is there even on non-resident supplier of services.
- Some examples of OIDAR services include: Online advertising service providers, Cloud service providers, Providing e-book, movie, music, software and other intangibles via telecommunication networks or the internet.
- A simple procedure has been prescribed for non-resident supplier of OIDAR services to pay GST.
” GST on E-commerce “
December 10, 2019
