GST OVERVIEW: E-COMMERCE OPERATORS
One of the sectors that have been hugely impacted by GST is e-commerce. E-commerce is a booming industry in India, and the GST regime has brought significant changes to the tax structure of e-commerce operators. E-commerce operators means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce
GST Applicability on E-commerce Operators:
There’s a general perception that E-commerce operators are compulsorily liable to be registered under the GST. This perception stems from section 24 which deals with cases where person is compulsorily required to get registration under the GST Laws. Entries in two sub-sections are as under-
(ix) persons who supply goods or services or both, other than supplies specified under sub-section (5) of section 9, through such electronic commerce operator who is required to collect tax at source under section 52;
(x) every electronic commerce operator who is required to collect tax at source under section 52;
But from careful examination of the same it gets crystal clear that registration is required only in cases where the E-commerce operators is
Deemed as supplier u/s 9(5) of the CGST, Act 2017 or the section 5(5) of the IGST Act, 2017.
Is liable to collect Tax at Source in accordance with section 52 of the CGST Act, 2017
Now let’s discuss both these case in depth-
Under Section 9(5) E-commerce operators that acts as an aggregator platform and provide certain specified goods/services are deemed to be supplier and are statutorily required to discharge the GST burden on behalf of the actual supplier supplying goods/services through their platform . The exhaustive list of services on which section 9(5) are applicable are as under-
Passenger Transport Service: Services by way of transportation of passengers by a radio-taxi, motorcab, maxicab and motor cycle; (best and very well known examples of such aggregator platforms are- Ola, Uber, Rapido etc.)
Accomodation Services: 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 clause (vi) of section 21 of the Union Territory Goods and Services Tax Act, 2017 read with sub-section (1) of section 22 of the said Central Goods and Services Tax Act.
Like OYO. Here it is to be noted that where the hotel etc are liable to be registered for reason that their turnover have exceeded the threshold limit, this provision of deemed supply by the E-commerce operators shall not apply.
Housekeeping Services: 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.
Like UrbanClap. Here also where the hotel etc are liable to be registered for reason that their turnover have exceeded the threshold limit, this provision of deemed supply by the E-commerce operators shall not apply.
Restaurant Services: Supply of restaurant service other than the services supplied by restaurant, eating joints etc. located at specified premises.
Therefore in case where Food is being supplied through Zomato, Swiggy the burden of collection and payment of GST lies with such E-commerce operators and not the restaurants. Also the benefit available to hotels providing accommodation services of paying GST on their own when their turnover exceeds threshold limit is not available to the restaurant services. Meaning thereby that GST has to be paid by Zomato/Swiggy even if their turnover exceeds threshold limit.
Now on the matter of where E-commerce operators is liable to collect tax u/s 52, it can be concluded without any doubt that only in case where the E-commerce operators suppliers goods/services of other from its platform then it is required to collect tax.
Meaning thereby, that only in cases where any E-commerce operator acts as an aggregator or facilitates supply of goods/services through its platform is liable to get compulsory registration under GST. If one sells their own goods/service though an E-commerce platform there exists no requirement for registration as e-commerce operator under the GST Act.
From the point of view of the person selling through such E-commerce operators platform such a person is required to be registered under GST only when inter-state supplies are to be made. But in case of services there is liberty to even make inter-state supply even without getting themselves registered, this off course is subject to the threshold limit.
Like ordinary registered person E-commerce operators are required to file GST return of GSTR-1/GSTR-3B on monthly/quarterly basis and GSTR-9/GSTR-9C on annual basis.
Penalties for Non-Compliance:
Through section 138 of the Finance Bill 2023 following penalty have been proposed by way of insertion of clause (1B) to section 122 of the CGST Act, 2017 which is as under-
“(1B) Any electronic commerce operator who—
(i) allows a supply of goods or services or both through it by an unregistered person other than a person exempted from registration by a notification issued under this Act to make such supply;
(ii) allows an inter-State supply of goods or services or both through it by a person who is not eligible to make such inter-State supply; or
(iii) fails to furnish the correct details in the statement to be furnished under sub-section (4) of section 52 of any outward supply of goods effected through it by a person exempted from obtaining registration under this Act,
shall be liable to pay a penalty of ten thousand rupees, or an amount equivalent to the amount of tax involved had such supply been made by a registered person other than a person paying tax under section 10, whichever is higher.”.
CA Pranay Jain is a young and aspiring Chartered Accountant. He qualified Chartered Accountancy Course in 2021 and has a well-established practice in various fields of taxation and auditing, with his core area of practice being in the field of litigation i.e., handling assessment and appeal-related matters and representing assesses before various tax departments.
He is also socially active on LinkedIn at linkedin.com/in/capranayjain
CA Pranay Jain