2024 (3) TMI 261 - AAR - GST

Collection of tax at source u/s 52 - Electronic commerce operator - Exclusion of Agent - Exemption under Notification No. 52/2018 - Whether applicant, who only collects a commission as a percentage of the value of digital gold sold through its platform and the entire sale proceeds are paid directly to seller of Digital gold through an Escrow account would qualify him as an 'Agent' for the purpose of GST law and is therefore not covered by applicability of Notification No. 52/2018 - Central Tax, read with Section 52 of Central Goods and Services Tax, 2017 and corresponding state Notification 20/2018 (Karnataka) read with Section 52 of Karnataka Goods and Services Tax, 2017? - HELD THAT - The applicant, quoting Section 52 of the CGST Act 2017 that deals with collection of tax at source and Section 2(45) of the CGST Act 2017 which defines electronic commerce operator contends that Section 52 excludes the 'agent' from its purview; their obligation is only to provide platform between the customer and the seller DGIPL as per article 2.2.1 of the agreement; correlating e-commerce operator and an agent with that of the tour operator and travel agent respectively submits that e-commerce operator is comparable to tour operator and is referred to as Principal as they take responsibility of their service whereas the agent is comparable to the Travel agent and do not act as a Principal as they don't take responsibility of the service but mere provide intended / selected service and thereby claims that they qualify to be a Selling Agent ; quoting different clauses of the agreement, the applicant contends that they are merely acting as an agent for DGIPL, and the operation carried out by them is beyond the scope of Section 52. The applicant, in comparison with e-commerce operators such as amazon etc., contends that they do not assume any responsibility; they do not collect any platform fee from the seller DGIPL; they charge only commission at a rate percent of the value of digital gold sold; they transact only single product at present through the app and thus they claim that they are a selling agent but not an e-commerce operator therefore they are excluded from the purview of Section 52 of the CGST Act 2017. Whether applicant is required to obtain registration as an E-commerce operator as per provisions of Rule 12 of Central Goods and Services Tax Rules, 2017? - HELD THAT - The applicant, being an electronic commerce operator, is required to collect tax at source under Section 52 of the CGST Act 2017 and thus is liable to be registered compulsorily under Section 24(x) of the CGST Act 2017 read with the provisions of the Rule 12 of CGST Rules 2017.

Summary

Issues Involved:
1. Whether the applicant qualifies as an 'Agent' for GST purposes and is excluded from the applicability of Notification No. 52/2018 - Central Tax, read with Section 52 of CGST Act, 2017.
2. Whether the applicant is required to obtain registration as an E-commerce operator as per Rule 12 of Central Goods and Services Tax Rules, 2017.

Issue 1: Qualification as an 'Agent'

The applicant, M/s. Changejar Technologies Pvt. Ltd., provides an online platform ("Jar") for the sale of digital gold offered by Digital Gold India Private Limited (DGIPL). The applicant collects a commission based on the value of digital gold sold, with the entire sale proceeds paid directly to DGIPL through an escrow account. The applicant argued that they merely provide a platform for transactions and do not assume responsibility for the gold's authenticity or quality, thus qualifying as an 'Agent' and being excluded from Section 52 of the CGST Act, 2017.

The Authority examined the definitions under Sections 2(44) and 2(45) of the CGST Act, 2017, and concluded that the applicant owns, operates, or manages a digital platform for electronic commerce, fitting the definition of an Electronic Commerce Operator (ECO). The agreement between the applicant and DGIPL explicitly states that the parties act as independent contractors and do not hold an agent-principal relationship. Therefore, the applicant qualifies as an ECO and not as an agent, making them liable under Section 52 of the CGST Act, 2017.

Issue 2: Requirement for Registration as an E-commerce Operator

The applicant contended that since they qualify as an agent, the provisions of Section 52 of the CGST Act, 2017, titled "Collection of Tax at Source," would not apply, and thus, they are not required to obtain registration as an E-commerce operator under Section 24(x) of the CGST Act, 2017.

The Authority determined that since the applicant is an ECO and is required to collect tax at source under Section 52 of the CGST Act, 2017, they must obtain compulsory registration under Section 24(x) of the CGST Act, 2017, read with the provisions of Rule 12 of the CGST Rules, 2017.

Ruling:

a. The applicant qualifies as an electronic commerce operator and is not an agent of DGIPL, thus falling under the purview of Notification No. 52/2018 - Central Tax, read with Section 52 of the CGST Act, 2017.

b. The applicant is required to collect tax at source under Section 52 of the CGST Act, 2017, and must be registered compulsorily under Section 24(x) of the CGST Act, 2017, read with Rule 12 of the CGST Rules, 2017.