INTRODUCTION:-
1) Goods are Services Tax [GST] has been imposed on "supply of goods or services". It is immaterial as to under what mode of communication the supply contract is negotiated. Tax remains the same even when contract is negotiated orally, in writing or through e-communication. Thus, on a fundamental level, GST on e-commerce operator remains similar to any other mode of supply. Nevertheless, there are a few distinctly specific provisions applicable to e-commerce operators and suppliers of goods or service supplying through e-commerce portals.
2) There can be two models of e-commerce. One situation can be where the supplier himself supplying goods or services through e-commerce portal. GST laws remains the same for the said supplier. Another model is the marketplace or fulfillment model of e-commerce, In this model, the e-commerce operator merely provides a platform to various suppliers. Two type transactions are happening in this model namely,
(i) Supplier supplying goods or services to the consumers and
(ii) The e-commerce operator supplying services to the supplier using its platform.
These are distinct transactions, and attract GST on their own.
3) Now understand the Meaning of Aggregator & E-Commerce Operator
Aggregator:- Aggregator means a person, who owns and manages an electronic platform, and by means of the application and a communication device, enables a potential customer to connect with the persons providing service of a particular kind under the brand name or trade name of the said aggregator. (E.g. Ola, Uber)
E-Commerce Operator:- As per Section 2(45) 'electronic commerce operator' means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce. (E.g. Amazone, Flipkart)
An aggregator (as defined) in the Model GST Law, has been subsumed in the definition of an e-commerce operator in the final act as it is redundant to define separately. So the word aggregator is dropped from the Act. The only distinction between an aggregator and other e-commerce operators is that an aggregator provides underlying services under his brand. (i.e. Every Aggregator is E-Commerce Operator but Every E-Commerce is not Aggregator)
4) For Better Understanding let's understand below mentioned Example:-
i) E-Commerce Operator:- Amazon and Flipkart are e-commerce Operators because they are facilitating actual suppliers to supply goods through their platform (popularly called Market place model or Fulfillment Model)
ii) Not an Ecommerce Operator:- Amazon and Flipkart will not be treated as e-commerce operators in relation to those supplies which they make on their own account (popularly called inventory Model)
iii) Not an Ecommerce Operator:- Amit Ltd. supplying watches and jewels through its own website would not be considered as an e-commerce operator for the purposes of this provision.
ELECTRONIC COMMERCE:-
DEFINITION:- As per Section 2(44) 'electronic commerce' means the supply of goods or services or both, including digital products over digital or electronic network.
REGISTRATION:- Under Section 24 of the CGST Act, every person supplying goods or services or both through electronic commerce operators are required to be compulsorily registered, without any threshold exemption limit. However, as per Notification No. 65/2017 CT, Dt. 15.11.2017, the Central Government, exempted persons making supplies of services only, other than supplies specified under sub-section (5) of section 9 of the said Act through an electronic commerce operator and having an aggregate turnover, to be computed on all India basis, not exceeding threshold limit of Rs. Forty Lakhs (w.e.f 01.04.2019) 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 the threshold limit. 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.
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. 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 before selling through the e- commerce platform.
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.
PLACE OF SUPPLY:-
1) Place of Supply of Goods (Section 10 of IGST Act, 2017):-
Supply involve movement of Goods:- Location of the goods at the time at which the movement of goods terminates for delivery to the recipient. (However where the goods are delivered by the supplier to a recipient or any other person on the direction of a third person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to the goods or otherwise, it shall be deemed that the said third person has received the goods and the place of supply of such goods shall be the principal place of business of such person.
Supply does not involve movement of Goods:- Location of such goods at the time of the delivery to the recipient.
2) Place of Supply of Service (Section 12 of IGST Act, 2017):-
Made to Registered Person:- Location of Such Person.
Made to Unregistered Person:-
i) The location of the recipient where the address on record exists.
ii) The location of the supplier of services in other cases.
EXAMPLES:-
Example 1:- Intra-state sales
Mr. Amit of Mumbai, Maharashtra orders a mobile from Amazon. The seller Saraswati Mobiles is registered in Nagpur, Maharashtra.:- The place of supply is Mumbai in Maharashtra. The location of the supplier is Mumbai. Since place of supply is in the same State as that of the location of supplier, CGST & SGST will be charged.
Example 2:- Inter-State sales
Mr. Amit of Mumbai, Maharashtra orders a mobile from Amazon. The seller Saraswati Mobile is registered in Bangalore, Karnataka.:- The place of supply here is Mumbai, Maharashtra. Since the location of supplier( i.e. Bangalore) is in different State when compared with the place of supply (i.e. Mumbai) IGST will be charged.
Example 3: Send to a third party
Mr. Amit of Mumbai, Maharashtra orders a mobile from Amazon to be delivered to his mother in Gujarat, M/s Saraswati Mobiles (online seller registered in Gujarat) processes the order and sends the mobile accordingly and Mr. Amit is billed by Amazon.:- Place of Supply will be Maharashtra as it it assumed that Mr. Amit has received the Mobile, Accordingly, IGST will be Charged.
From the above provision it is clear that place of supply is determine based on consumption of the goods not origin of goods. (i.e. place of supply wiil be the place where goods are finelly consumed.)
INVOICING:-
As per Section 31 of CGST Act, 2017, A Registered person required to issue Tax Invoice containing following perticular as metioned in Rule 46,
i) Name, address and Goods and Services Tax Identification Number of the supplier.
ii) A consecutive serial number not exceeding sixteen characters.
iii) Date of its issue.
iv) Name, address and Goods and Services Tax Identification Number or Unique Identity Number, if registered, of the recipient.
v) Harmonized System of Nomenclature code for goods or services.
vi) Description of goods or services.
vii) Quantity in case of goods and unit or Unique Quantity Code thereof.
viii) Total value of supply of goods.
ix) Taxable value of the supply (After Discount).
x) Rate of tax.
xi) Amount of tax charged in respect of taxable goods or services (central tax, State tax, integrated tax, Union territory tax or cess)
xii) Whether the tax is payable on reverse charge basis.
xiii) Signature or digital signature of the supplier or his authorized representative.
RETURNS:-
Every Registered person need to be furnish the return under Sections 37, Section 38, Section 39, Section 44 of CGST Act, 2017 as the manner provided in rules 59 to 61 of CGST Rules, 2017.
Following returns are required to furnished by every registered person.
1) Form 3B in every Month (Computation of Liability after considering of eligible input tax credit)
2) GSTR1 on Monthly or Quarterly Basis, If last year T/o is up to Rs. 1.5 Cr. then Quarterly otherwise Monthly. (Detisl of outword taxable supplies)
3) Annual Return (Once in a Year)
ELECTRONIC COMMERCE OPERATOR:-
DEFINITION:-As per Section 2(45) 'electronic commerce operator' means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce.
REGISTRATION:-
1) As per Section 24 of GST Amended Act, 2019 Every Electronic commerce operator, who are required to collect tax at source under section 52, are mandatorily required to registered under GST.
2) Person who are required to pay tax under sub-section (5) of section 9 has to compulsorily register as per provisions of section 24.
3) 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 as a supplier or otherwise and has GSTIN
SERVICES SPECIFIED U/S 9(5) OF CGST ACT, & U/S 5(5) OF IGST ACT, 2017:-
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 the following categories of services, the tax on intra-State/ inter-state supplies shall be paid by the ECO.
i) Transportation of passengers by a radio-taxi, motorcab, maxicab and motorcycle. (Notification No. 17/2017-Central Tax (Rate) dt 28th June, 2017 Corresponding IGST Notification No. 14/2017- Integrated Tax (Rate) dt 28th June, 2017)
ii) Providing accommodation in hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes (Notification No. 17/2017-Central Tax (Rate) dt 28th June, 2017 Corresponding IGST Notification No. 14/2017- Integrated Tax (Rate) dt 28th June, 2017)
iii) Services by way of house-keeping, such as plumbing, carpentering etc. (Notification No. 23/2017-Central Tax(Rate) dated 22nd Aug, 2017 Corresponding Notification No. 23/2017-Integrated Tax (Rate) dated 22nd Aug, 2017)
LEVY & COLLECTION:-
E-commerce operator are charging a commission from various suppliers. It amounts to support services, falling under Tariff heading 9985, and shall attract GST at the rate of 18%. In each & every E-Commerce transaction there is Three type of Parties & Two type of Transactions.
Parties:-
1) Supplier of Goods & Service.
2) Receiver of Supplies.
3) E-Commerce Operator.
Transactions:-
1) Between Supplier of Goods or Service and Receiver of Supplies:- Supply of Goods or Service or both.
2) Between Supplier of Goods or Service and E-Commerce Operator:- Provision of Electronic Platform.
GST shall be levied on both transactions:-
1) 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))
2) Seller & ECO: GST on commission value/ other charges earned by ECO for providing Electronic Platform to seller. (GST shall be paid by the ECO)
COLLECTION OF TAX AT SOURCES (Section 52):-
Every electronic commerce operator (hereafter in this section referred to as the 'operator'), not being an agent, shall collect an amount calculated at such rate not exceeding one per cent., as may be notified by the Government on the recommendations of the Council, 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.
Explanation:- For the purposes of this sub-section, the expression 'net value of taxable supplies' shall mean the aggregate value of taxable supplies of goods or services or both, other than services notified under sub-section (5) of section 9, 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.
From the above content it is concluded that TCS is to be collected only if following conditions are satisfies.
1) Supplies to be made through E-Commerce operator by other suppliers.
2) Consideration with respect to such supplies is to be collected by the operator.
3) Supplies to be taxable (i.e. Non GST or Exempted supply is not covered for TCS)
As per the above mentioned definition it is conclude that TCS provision is not applicable to Aggregator (e.g. Ola & Uber), because of services supply through aggregator portal will be considered as services supply by Aggregator itself, hence aggregator themselves liable to collect and deposit GST.
SALIENT FEATURES OF TCS:-
1) Where an electronic commerce operator does not have a physical presence in the taxable territory, any person representing such electronic commerce operator for any purpose in the taxable territory shall be liable to pay tax.
2) where an electronic commerce operator does not have a physical presence in the taxable territory and also he does not have a representative in the said territory, such electronic commerce operator shall appoint a person in the taxable territory for the purpose of paying tax and such person shall be liable to pay tax.
3) The amount collected under section 52 shall be paid to the Government by the operator within ten days after the end of the month in which such collection is made. (Form GSTR-8)
4) The details furnished by the operator shall be made available electronically to each of the suppliers in Part C of FORM GSTR-2A on the common portal after the due date of filing of FORM GSTR-8.
5) The following details relating to the supplies made through an e-Commerce operator, as declared in FORM GSTR-8, shall be matched with the corresponding details declared by the supplier in FORM GSTR-1,
a) State of place of supply; and
b) Net taxable value.
6) Any discrepancy in the details furnished by the operator and those declared by the supplier shall be made available to the supplier electronically in FORM GST MIS-3 and to the e-commerce operator electronically in FORM GST MIS–4 on the common portal on or before the last date of the month in which the matching has been carried out.
7) Supplier to whom any discrepancy is made available may make suitable rectifications in the statement of outward supplies to be furnished for the month in which the discrepancy is made available.
8) An operator to whom any discrepancy is made available may make suitable rectifications in the statement to be furnished for the month in which the discrepancy is made available.
9) Where the discrepancy is not rectified, an amount to the extent of discrepancy shall be added to the output tax liability of the supplier in his return in FORM GSTR-3 for the month succeeding the month in which the details of discrepancy are made available and such addition to the output tax liability and interest payable thereon shall be made available to the supplier electronically on the common portal in FORM GST MIS–3.
10) Every electronic commerce operator required to collect tax at source under section 52 shall furnish annual statement referred to in sub-section (5) of the said section in FORM GSTR -9B.
CONCLUSION:-
E-commerce transactions look a bit complicated because many transactions are happening simultaneously. Thus, when a person is buying goods on Amazon, two transactions are happening simultaneously. The supplier is supplying goods through e-commerce portal and the e-commerce portal is supplying services to the supplier. Both the transactions are different transactions and subject to GST in its own nature. TCS provisions comes into operations at the time of receiving considerations from buyer.
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