Applicability of GST on E-Commerce

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E-Commerce
CA Rahul Dhuparh AM, RD, Taxmann.com
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E-Commerce
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Relevant Definitions
(44) Electronic commerce means the supply of
goods or services, including digital products
over a digital or electronic network (45)
Electronic commerce operator means any person
who owns, operates or manages a digital or
electronic facility or platform for electronic
commerce (5) Agent means a person, including
a factor, broker, commission agent, arhatia,
del-credere agent, an auctioneer or any other
mercantile agent, who carries on the business of
supply or receipt of goods or services on behalf
of another (13) Intermediary means a broker,
an agent or any other person, who arranges or
facilitates the supply of goods or services, or
securities, between two or more persons, but does
not include a person who supplies such goods or
services or securities on his own account
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Services listed under section 9(5)

• Following 3 services have been notified u/s 9(5)
  of CGST Act,
• Services by way of transportation of passengers
  by a radio-taxi, motor-cab, maxi-cab
  motorcycle
• Services by way of providing accommodation in
  hotels, inns, guest houses, clubs, meant for
  residential or lodging purposes
• Services by way of house-keeping, such as
  plumbing, carpentering etc.
• Except where the person supplying such service
  through ECO is liable for registration u/s 22(1)
  of the CGST Act
• In all the above 3 cases liability to pay GST is
  of ECO not of the actual supplier.

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Registration of an ECO.
Section 24 Mandatory Registration (iv)
Persons who are required to pay tax u/s 9(5)
(ix) Persons who supply goods or services,
other than section 9(5), through such ECO who is
required to collect TCS u/s 52 (x) Every ECO
who is required to collect TCS u/s 52
(Inserted by CGST Amendment Act) (xi) Every
person supplying OIDAR services from a place
outside India to a person in India, other than a
registered person N/N.65/2017-CT, Dated
15-11-2017
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Is every one making supplies through ECO required
to be registered?
For Goods Irrespective of their turnover limit,
suppliers are mandatorily required to get
registered in order to make supplies through an
ECO. For Services Through special exemptions
except services of section 9(5) Suppliers are
allowed to supply services up-to Rs. 20/10 lakhs,
through an ECO. Since such suppliers are not
liable for registration, ECO are not required to
collect TCS on supply of services being made by
such suppliers through their portal. N/N.65/20
17-CT, Dated 15-11-2017.
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Liability to pay GST in case of ECO

• Who is liable to pay tax for the goods or
  services supplied by a supplier through ECO?
• Generally, supplier of goods or services is
  required to pay GST, except services covered by
  Sec 9(5) for which ECO is required to pay GST in
  respect of those services, taking an assumption
  that these services are supplied by such ECO not
  by the actual supplier all the provisions of
  GST shall apply to such ECO.
• Notification No. 17/2017-Central Tax (Rate),
  Dated 28-6-2017

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Place of Supply of Services

• There are two legs involved in a single
  transaction executed through a third party ECO.
• Services provided by ECO to the Supplier (against
  commission charged by ECO)
• Goods or Services provided by the Supplier to the
  actual recipient.
• For determining the place of supply following two
  aspects are required to be taken into
  consideration
• If Both the Supplier and the Recipient are
  located in India.
• If either the Supplier or the Recipient is
  located outside in India.

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If Both the Supplier the Recipient are located
in India.

• The POS for such services shall be determined as
  per the general rule i.e., Section 12(2) of the
  IGST Act.
• Supplies made to a registered person (B2B)
• Then the location of such registered person shall
  be the place of supply.
• Example, Mr. R (Registered person) supplied
  watches through ECO worth Rs. 100,000 in the
  month of July, 2019. ECO has charged commission
  of 5 i.e., Rs 5,000 on total sales value, The
  Place of supply for the commission charged by the
  ECO shall be the location of Mr. R.

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If Both the Supplier the Recipient are located
in India.

• Supplies made to an un-registered person (B2C)
• Where the address of such un-registered person is
  available.
• Then such address shall be taken to be the place
  of supply for such services.
• Example, In the previous example, assuming Mr. R
  is an un-registered person and supplying books
  through such ECO, in this case, for the
  commission charged by the ECO, the place of
  supply shall be the location of Mr. R, as he
  would have given at the time of becoming seller
  with such ECO.
• Where the address of such un-registered person is
  not available.
• Then the location of the supplier of services
  shall be taken to be the place of supply.

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If either the Supplier or the Recipient is
located outside in India.

• The place of Supply for such services shall be
  determined as per the general rule i.e., Section
  13(2) of the IGST Act.
• Location of recipient is available
• The place of supply for such services shall be
  the location of the recipient of services.
• Example, Mr. R supplied watches through a foreign
  ECO worth Rs. 100,000 in the month of July, 2019.
  ECO has charged commission of 5 i.e., Rs 5,000
  on total sales value, The Place of supply for the
  commission charged by the ECO shall be the
  location of Mr. R.
• Location of recipient is not available
• The place of supply in this case shall be the
  location of supplier of services.

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Applicability of TCS from October 1, 2018
Relevant Section Rules of the CGST Act.
N/N .51/2018-CT, dated 13-9-2018
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Q A for to TCS,

• Is every ECO required to collect TCS?
• Every ECO, not being an agent, shall collect TCS,
  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.
• 1 exception, i.e., Supplier of services listed
  u/s 9(5).
• Rate at which TCS is required to be collected by
  ECO?
• ECO shall collect TCS at the rate of 1 of the
  net value of taxable supplies made through it,
  where consideration with respect to such supplies
  is collected by it.
• Is there any exemption on Gold, as the rate of
  GST is only 3 and TCS on it would erode the
  margin for the seller?
• No such exemption from TCS has been granted.

N/N.52/2018-CT 2/2018-IT, dated 20-9-2018
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Q A for to TCS,

• Can an ECO pay the amount of TCS collected to the
  government using the ITC available with them?
• The amount as collected by the ECO shall be
  deposited with the Government in cash only. There
  is no provision of paying TCS collected by ECO
  through utilizing ITC available with them.
• Under multiple e-commerce model, Customer books a
  Hotel via ECO-1 who in turn is collaborates with
  ECO-2 who has agreement with the hotelier. In
  this case, ECO-1 will not have any GST
  information of the hotelier. Under such
  circumstances, which ECO should be liable to
  collect TCS?
• TCS is to be collected by that ECO who is making
  payment to the supplier for the particular
  supply, which is in this case will be ECO-2.

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Q A for to TCS,

• Compliances to done by such ECO.
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• The TCS collected by the ECO shall be deposited
  by the 10th of the following month, during which
  collection is made. He shall furnish a statement
  in form GSTR-8, on monthly basis containing
  details of supplies effected through it.
• Also, he is required to file Annual Statement in
  form GSTR-9B by 31st December following the end
  of every financial year. (However till date no
  such form has been notified).
• Compliances to done by Supplier supplying through
  ECO.
• Such supplier shall be complying with the
  required compliances in the normal fashion i.e.,
  The amount of TCS collected and paid by the ECO
  shall be reflected in suppliers GSTR-2A, the same
  gets transferred to the cash ledger of the said
  supplier, which can be used at the time of
  discharge of tax liability in respect of the
  supplies made him.

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