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With the fast changing business scenario, the way business is done is also changing rapidly. Presently, the buzz word is "E-Commerce" or "Electronic Commerce". A simple definition of E-Commerce would be commercial transaction conducted electronically. Many E-commerce companies like Flipkart, Myntra, Paytm, Amazon, Makemytrip has replaced the traditional business as they have evolved a new models of supply of goods and services.

As per S. 2(41) of Revised Model GST Law (referred as "law" herewith) electronic commerce means supply of goods and / or services including digital products over digital or electronic network. The law also states that Central or a State Government may, on the recommendation of the Council, by notification, specify categories of services the tax on 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 person liable for paying the tax in relation to the supply of such services.

The "Electronic Commerce Operator" plays an important role with respect to payment of taxes. S.2 (42) of the law says that electronic commerce operator means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce.

Certain proviso which are applicable for the Electronic Commerce Operators are:

If the Electronic Commerce Operator does not have physical presence in the territory, any person representing such electronic commerce operator for any purpose in the taxable territory shall be liable to pay tax. Further, if Electronic Commerce Operator does not have physical presence in the territory or does not appoint any person in the taxable territory for the purpose of paying tax, he shall appoint such person in the taxable territory who shall be liable to pay tax.

It is also important to note that unlike in the existing service tax provision, where the e-commerce operator is made liable to pay service tax only in case where service is provided under the brand of the operator, whereas in the case of GST whether the service is provided under the own brand (say example Redbus, Make my trip) or under the brand of the operator (say example Uber or Ola) still the operator shall have to pay the applicable GST.

Levy of tax

At the outset, no threshold exemption has been provided to the electronic commerce operator. Thus, any person who is an electronic commerce operator or is supplying through an electronic commerce operator shall be required to levy GST from his first rupee of supply. In case of stock – and-sell model, GST would be levied on the entire value of goods and shall be paid by the owner of the goods and also the website. In case of service model, GST would be levied on the value of supplies made through such websites. In the earlier model, the site owner being the service provider himself, needs to comply with the levy and discharge of GST. In case of aggregators, though the levy is on the supplier of services to customers, the liability to pay such tax has been casted upon the aggregator in certain cases vide S.8(4). Only in case of C2C transactions, a plea can be taken that no GST is leviable as such supplies are not made in the course of furtherance of business.

Rate of tax

Section 56(1) says that in spite of anything to the contrary contained in the Act, every electronic commerce operator (say-operator), not being an agent, shall collect an amount calculated at the rate of one percent of the net value of taxable supplies made through it where the consideration with respect to such supplies is to be collected by the operator.An explanation to section 56(1) says that for the purposes of this subsection, the expression "net value of taxable supplies" shall mean the aggregate value of taxable supplies of goods or services, other than services notified under section 8(4), 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.

The exemption for making the collection of tax at source is as under-

a. In case the services provided are notified under section 8(4) by which such operator is liable to pay service tax
b. If the operator is acting as an Agent (logistic provider)
c. In case the consideration has been paid directly by the recipient to the supplier [Cash on Delivery - (COD) transactions]

Time limit for collection of tax

Section 56(2) says that the power to collect the amount specified in section 56(1) shall be without prejudice to any other mode of recovery from the operator. The amount collected under section 56(1) shall be paid to the account of the appropriate Government by the operator within ten days after the end of the month in which such collection is made in the manner as may be prescribed.

Time limit for furnishing a statement

Section 56(3) says that every operator who collects the amount specified in section 56(1) shall furnish a statement, electronically, containing the details of outward supplies of goods or services effected through it, including the supplies of goods or services returned through it, and the amount collected under section 56(1) during a month, in such form and manner as may be prescribed, within ten days after the end of such month.

Credit to be taken by supplier

Section 56(4) says that the supplier who has supplied the goods or services through the operator shall claim credit, in his electronic cash ledger, of the amount collected and reflected in the statement of the operator furnished under section 56(3), in the manner prescribed.

Matching of details

Section 56(5) says that the details of supplies furnished by every operator under section 56(3), shall, in the manner and within the period prescribed, be matched with the corresponding details of outward supplies furnished by the concerned supplier registered under the Act.

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Published by

CA Amrita Chattopadhyay
(Audit & Assurance)
Category GST   Report

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