GST on E Commerce : Analysis

By | September 6, 2016
(Last Updated On: September 6, 2016)


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E-commerce companies selling goods on portal are being made liable to collect GST at source.

In effect, the e-commerce companies will be paying advance GST. The actual supplier supplying goods to ultimate customer can avail input tax credit of GST paid by the electronic commerce operator.

Electronic commerce‘ shall mean the supply or receipt of goods and/or services, or transmitting of funds or data, over an electronic network, primarily the internet, by using any of the applications that rely on the internet, like but not limited to e-mail, instant messaging, shopping carts, Web services, Universal Description, Discovery and Integration (UDDI), File Transfer Protocol (FTP), and Electronic Data Interchange (EDI), whether or not the payment is conducted online and whether or not the ultimate delivery of the goods and/or services is done by the operator – clause 43B(d) of GST Model Law, 2016.

Electronic commerce operator‘ shall include every person who, directly or indirectly, owns, operates or manages an electronic platform that is engaged in facilitating the supply of any goods and/or services or in providing any information or any other services incidental to or in connection there with but shall not include persons engaged in supply of such goods and/or services on their own behalf – clause 43B(e) of Model GST Law, 2016.

Operator – Electronic Commerce Operator

‘Aggregatormeans 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 – clause 43B(a) of GST Model Law, 2016.

Brand name or trade name‘ means, a brand name or a trade name, whether registered or not, that is to say, a name or a mark, such as an invented word or writing, or a symbol, monogram, logo, label, signature, which is used for the purpose of indicating, or so as to indicate a connection, in the course of trade, between a service and some other person using the name or mark with or without any indication of the identity of that person.

‘Branded Services’ means services which are supplied by an electronic commerce operator under its own brand name or trade name, whether registered or not.

Definitions of Aggregator, brand name and branded services have been given in clause 43B of GST Model Law, 2016 .

Collection of tax at source by electronic commerce operator

The e-commerce operator to collect ‘amount’ while passing on amount to actual supplier – Every electronic commerce operator (hereinafter referred to in this section as the “operator”) shall, at the time of credit of any amount to the account of the supplier of goods and/or services or at the time of payment of any amount in cash or by any other mode, whichever is earlier, collect an amount, out of the amount payable or paid to the supplier, representing consideration towards the supply of goods and/or services made through it, calculated at such rate as may be notified – clause 43C(1) of GST Model Law, 2016.

Amount collected by e-commerce operator to be paid to Government – The amount collected as above shall be paid to the credit 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 prescribed – clause 43C(3) of GST Model Law, 2016.

“Appropriate Government” means the Central Government in case of the IGST and the CGST, and the State Government in case of the SGST – clause 2(11) of GST Model Law, 2016.

E-commerce Operator to submit account to Government every month – Every operator shall, furnish a statement, electronically, of all amounts collected towards outward supplies of goods and/or services effected through it, during a calendar month, within ten days after the end of such calendar month – clause 43C(4)(a) of GST Model Law, 2016.

The statement shall contain the details of the amount collected on behalf of each supplier in respect of all supplies of goods and/or services effected through the operator and the details of such supplies during the said calendar month.

Payment of amount is deemed to be tax on behalf of supplier of goods and services – Any amount collected in accordance with the provisions of this section and paid to the credit of the appropriate Government shall be deemed to be a payment of tax on behalf of the concerned supplier and the supplier shall claim credit, in his electronic cash ledger, of the tax collected and reflected in the statement of the operator – clause 43C(5) of GST Model Law, 2016.

Concerned supplier‘ shall mean the supplier of goods and/or services making supplies through the operator – explanation to clause 43C of GST Model Law, 2016.

Matching of statement of e-commerce operator and credit taken by supplier – The details of supplies and the amount collected shall be matched with the corresponding details of outward supplies furnished by the concerned supplier in his valid return for the same calendar month or any preceding calendar month – clause 43C(6) of GST Model Law, 2016.

Discrepancy between the details of operator and supplier – Where the details of outward supply, on which the tax has been collected, as declared by the operator do not match with the corresponding details declared by the supplier, the discrepancy shall be communicated to both persons.

If the discrepancy is not rectified, it shall be added to the output liability of the said supplier for the calendar month succeeding the calendar month in which the discrepancy is communicated.

The concerned supplier shall be liable to pay the tax payable in respect of such supply along with interest on the amount so added from the date such tax was due till the date of its payment – clause 43C(9) of GST Model Law, 2016.

Concerned supplier‘ shall mean the supplier of goods and/or services making supplies through the operator – explanation to clause 43C of GST Model Law, 2016.

E-commerce operator to furnish details

Any authority not below the rank of Joint Commissioner may, by notice, either before or during the course of any proceeding under this Act, require the operator to furnish such details relating to—

(a) supplies of goods and/or services effected through such operator during any period, or

(b) stock of goods held by the suppliers making supplies through such operator in the godowns or warehouses, by whatever name called, managed by such operators and declared as additional places of business by such suppliers as may be specified in the notice.

Every operator on whom a notice has been served shall furnish the required information within five working days of the date of service of such notice.

Penalty for not furnishing information – Any person who fails to furnish the information required by the notice shall, without prejudice to any action that is or may be taken under section 66, be liable to a penalty which may extend to rupees twenty-five thousand.

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