COLLECTION OF TAX AT SOURCE UNDER ‘GST’

[Mr. M. GOVINDARAJAN]

Date of effect

The provisions of GST came into effect from 01.07.2017.  Section 3 of the Central Goods and Services Tax Act, 2017 (‘Act’ for short) provides that different dates may be appointed for different provisions of this Act and any reference in any such provision to the commencement of this Act shall be construed as a reference to the coming into force of that provision.

Vide Notification No. 51/2018-Central Tax, dated 13.09.2018, the Central Government appointed 01.10.2018 as the date on which the provisions of section 52 (tax collected at source) of the Act will come into force.

Who are to collect tax at source?

Section 52(1) provides that every electronic commerce operator, not being an agent, shall collect an amount calculated 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.    The power to collect the amount shall be without prejudice to any other mode of recovery from the operator.

Net value of taxable supplies

The expression “net value of taxable supplies” shall mean the aggregate value of taxable supplies of goods or services or both, other than services notified under section 9(5), made during any month by all registered persons through the operator reduced by the aggregate value of taxable supplies returned to the suppliers during the said month.

Registration

Section 24 provides for compulsory registration under the Act for certain persons.  One among them is the persons who collect tax under section 52.  Section 24(x) provides for compulsory registration by the persons who are required to collect tax under section 52.

Grant of registration certificate

Rule 12 provides that any person required to collect tax at source shall electronically submit an application, duly signed or verified through electronic verification code, in Form GST REG-07 for the grant of registration through the common portal.  The proper officer may grant registration after due verification and issue a certificate of registration in FORM GST REG-06 within a period of three working days from the date of submission of the application.

Amendment of registration certificate

Rule 19 provides that where there is any change in any of the particulars furnished in the application for registration in Form GST REG-07 the registered person shall, within a period of fifteen days of such change, submit an application, duly signed or verified through electronic verification code, electronically in Form GST REG-14, along with the documents relating to such change at the common portal, either directly or through a Facilitation Centre notified by the Commissioner.  If the particulars furnished is correct the proper officer will cause amendment of registration certificate.

Where the proper officer is of the opinion that the amendment sought is either not warranted or the documents furnished therewith are incomplete or incorrect, he may, within a period of fifteen working days from the date of the receipt of the application in Form GST REG-14, serve a notice in Form GST REG-03, requiring the registered person to show cause, within a period of seven working days of the service of the said notice, as to why the application submitted shall not be rejected.   The registered person shall furnish a reply to the notice to show cause, in Form GST REG-04, within a period of seven working days from the date of the service of the said notice.    Where the reply furnished is found to be not satisfactory or where no reply is furnished in response to the notice issued within the period prescribed the proper officer shall reject the application submitted and pass an order in Form GST REG -05.

If the proper officer fails to take any action,-

(a) within a period of fifteen working days from the date of submission of the application, or

(b) within a period of seven working days from the date of the receipt of the reply to the notice to show cause,

the certificate of registration shall stand amended to the extent applied for and the amended certificate shall be made available to the registered person on the common portal.

Cancellation of registration certificate

Where, upon an enquiry or pursuant to any other proceeding under the Act, the proper officer is satisfied that a person to whom a certificate of registration in Form GST REG-06 has been issued is no longer liable to collect tax at source under 52 the  said officer may cancel the registration and such cancellation shall be communicated to the said person electronically in Form GST REG-08.  The proper officer shall follow the procedure as provided in rule 22 for the cancellation of registration.

Rate of tax

Every electronic commerce operator, not being an agent, shall collect an amount calculated at such rate not exceeding one per cent., as may be notified by the Government on the recommendations of the Council, 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.

Due date for payment of tax collected

The amount collected as tax under section 52 shall be paid to the Government by within 10 days after the end of the month in which such collection is made, in such manner as may be prescribed.

If any person who collects the tax at source fails to pay to the Government the amount collected as tax he shall pay interest in accordance with the provisions of section 50(1), in addition to the amount of tax collected.

Penalty

Section 122(1)(vi) provides that where a person fails to collect tax in accordance with the provisions of sub-section (1) of section 52, or collects an amount which is less than the amount required to be collected under the said sub-section or where he fails to pay to the Government the amount collected as tax under sub-section (3) of section 52, he shall be liable to pay a penalty of ten thousand rupees or an amount equivalent to the tax evaded or the tax not collected under section 52 or short collected or collected but not paid to the Government whichever is higher.

Furnishing of statement

Section 52(4) provides that every operator who collects the amount shall furnish a statement, electronically, containing the details of outward supplies of goods or services or both effected through it, including the supplies of goods or services or both returned through it, and the amount collected during a month, Form GSTR - 8, within ten days after the end of such month.

The following information is to be furnished in Form GSTR – 8-

• Basic details;
• Details of supplies made through e-commerce operator;
• Amendments to details of supplies in respect of any earlier statement;
• Details of interest;
• Tax payable and paid;
• Interest payable and paid;
• Refund claimed from electronic cash ledger;
• Debit entries in cash ledger for TCS/interest payment (to be populated after payment of tax and submissions of return)
• Verification

The details of tax collected at source furnished by an e-commerce operator under section 52 in Form GSTR-8 shall be made available to the concerned person in Part C of Form GSTR 2A electronically through the common portal and such person may include the same in Form GSTR-2 after filing the return Form GSTR-8.

Rectification of statement

Section 52(6) provides that if any operator after furnishing a statement discovers any omission or incorrect particulars therein, other than as a result of scrutiny, audit, inspection or enforcement activity by the tax authorities, he shall rectify such omission or incorrect particulars in the statement to be furnished for the month during which such omission or incorrect particulars are noticed, subject to payment of interest, as specified in sub-section (1) of section 50.

No such rectification of any omission or incorrect particulars shall be allowed after the due date for furnishing of statement for the month of September following the end of the financial year or the actual date of furnishing of the relevant annual statement, whichever is earlier.

Matching with GSTR – 1

Section 52(8) provides that the details of supplies furnished by every operator shall be matched with the corresponding details of outward supplies furnished by the concerned supplier registered under this Act.  Rule 78 provides that the following details relating to the supplies made through an e-Commerce operator, as declared in Form GSTR-8, shall be matched with the corresponding details declared by the supplier in Form GSTR-1-

• State of place of supply; and
•  net taxable value

where the time limit for furnishing Form GSTR-1 under section 37 has been extended, the date of matching of the above mentioned details shall be extended accordingly.     The Commissioner may, on the recommendations of the Council, by order, extend the date of matching to such date as may be specified therein.

Communication of discrepancies

Section 52(9) provides that where the details of outward supplies furnished by the operator do not match with the corresponding details furnished by the supplier under section 37 or section 39, the discrepancy shall be communicated to both persons in such manner and within such time as may be prescribed.

Rule 79 provides that any discrepancy in the details furnished by the operator and those declared by the supplier shall be made available to the supplier electronically in Form GST MIS-3 and to the e-commerce operator electronically in Form GST MIS–4 on the common portal on or before the last date of the month in which the matching has been carried out. 

Rectification of discrepancies

A supplier to whom any discrepancy is made available may make suitable rectifications in the statement of outward supplies to be furnished for the month in which the discrepancy is made available.

Where the discrepancy is not rectified, an amount to the extent of discrepancy shall be added to the output tax liability of the supplier in his return in Form GSTR-3 for the month succeeding the month in which the details of discrepancy are made available and such addition to the output tax liability and interest payable thereon shall be made available to the supplier electronically on the common portal in Form GST MIS–3.

Section 52(11) provides that the concerned supplier, in whose output tax liability any amount has been added, shall pay the tax payable in respect of such supply along with interest, at the rate specified under section 50(1) on the amount so added from the date such tax was due till the date of its payment.

Powers of Authority

Any authority not below the rank of Deputy Commissioner may serve a notice, either before or during the course of any proceedings under this Act, requiring the operator to furnish such details relating to–

• supplies of goods or services or both effected through such operator during any period; or
• stock of goods held by the suppliers making supplies through such operator in the godowns or warehouses, by whatever name called, managed by such operator 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 fifteen working days of the date of service of such notice.

Any person who fails to furnish the information required by the notice served shall, without prejudice to any action that may be taken under section 122, be liable to a penalty which may extend to ₹ 25,000/-.

Furnishing of Annual statement

Section 52(5) provides that every operator who collects the amount shall furnish an annual statement, electronically, containing the details of outward supplies of goods or services or both effected through it, including the supplies of goods or services or both returned through it, and the amount collected under the said sub-section during the financial year, in Form GST -9B (not yet notified), before the thirty first day of December following the end of such financial year.