ANALYSIS OF E- COMMERCE OPERATOR IN GST

[Yogesh Narang]

INTRODUCTION:

In the present article I will discuss the important aspects of E-Commerce Operator (in short “ECO”) in GST. In this era ECO plays an important or vital role in our life and it have impact not only to the market but day to day life of human being also.  To understand the GST law applicable on the ECO, we have to know the meaning of ECO, which has been provided in GST.

MEANING OF ECO AND EC (ELECTRONIC COMMERCE) :

 As per Section 2(45) of CGST Act, 2017, “electronic commerce operator” means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce;

As per Section 2(44) of CGST Act, 2017, (44) “electronic commerce” means the supply of goods or services or both, including digital products over digital or electronic network;

COMPULSORY REGISTRATION OF ECO:

As per Section 24(x), of CGST Act, 2017, every electronic commerce operator who is required to collect tax at source under section 52;

Section 24 of CGST Act, 2017, deals with compulsory registration under GST Act, and clause (x) of section 24 of CGST Act, 2017, states that every electronic commerce operator who is required to collect tax at source u/s 52 of the GST Act, 2017, shall apply for registration under GST Act, 2017. This provision was inserted through CGST Amendment Act, 2018 that take effect from 01.02.2019. Earlier to this every electronic commerce operator was required to get compulsory registration under GST Act, 2017.

COMPULSORY REGISTRATION FOR PERSON SUPPLYING THROUGH ECO: 

Section 24(ix) of CGST Act, 2017, states that 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;

It means that section 24(ix) of CGST Act, 2017, required compulsory registration to every person who is supplying good or service or both, other than the supplies mention in 9(5) of CGST Act, 2017, through ECO, which is required to TCS u/s 52 of CGST Act, 2017.

It is also clear that any supplier who supplying the goods or services, covered u/s 9(5) of CGST Act, 2017, through ECO are not required to get compulsory registration u/s 24(ix) of CGST Act, 2017, they can get the benefit of threshold limit as prescribed under GST Act, 2017.

REVERSE CHARGE MACHANISM ON ECO:

Section 9(5) of CGST Act,2017 and Section 5(5) of IGST Act, 2017, deals with the provisions of RCM on ECO, which are as under:

Section 9(5) of CGST Act, 2017;

The Government may, on the recommendations of the Council, by notification, specify categories of services the tax on intra-State supplies of which shall be paid by the electronic commerce operator if such services are supplied through it, and all the provisions of this Act shall apply to such electronic commerce operator as if he is the supplier liable for paying the tax in relation to the supply of such services:

Provided that where an electronic commerce operator does not have a physical presence in the taxable territory, any person representing such electronic commerce operator for any purpose in the taxable territory shall be liable to pay tax:

Provided further that where an electronic commerce operator does not have a physical presence in the taxable territory and also he does not have a representative in the said territory, such electronic commerce operator shall appoint a person in the taxable territory for the purpose of paying tax and such person shall be liable to pay tax.

Section 5(5) of the IGST Act, 2017;

The Government may, on the recommendations of the Council, by notification, specify categories of services, the tax on inter-State supplies of which shall be paid by the electronic commerce operator if such services are supplied through it, and all the provisions of this Act shall apply to such electronic commerce operator as if he is the supplier liable for paying the tax in relation to the supply of such services

Provided that where an electronic commerce operator does not have a physical presence in the taxable territory, any person representing such electronic commerce operator for any purpose in the taxable territory shall be liable to pay tax.

Provided further that where an electronic commerce operator does not have a physical presence in the taxable territory and also does not have a representative in the said territory, such electronic commerce operator shall appoint a person in the taxable territory for the purpose of paying tax and such person shall be liable to pay tax.

It comes out from the bare language of sections that the government on the recommendation of GST council, notify the category of services, supplied through ECO, on which the tax on intra-state or inter-state supplies shall be paid by the ECO by treating the same as supplier of such services.

It is provided that if the ECO does not have any physical presence in the taxable territory, any person representing such ECO shall be liable to pay tax on the behalf of ECO.

It is further provided in law that if the ECO does not have physical presence in the taxable territory and also does not have a representative in the said territory, in such case ECO is bound by law to appoint a person in the taxable territory for the purpose of paying taxes under the GST Act, 2017.

 It also clear that this section talks about notified services supplied through ECO. This section not applied on supply of goods through ECO.

NOTIFIED SERVICES U/S 9(5) OF CGST ACT, 2017 AND 5(5) OF IGST ACT, 2017: 

S. No.	Description of supply of Service	Supplier of service	Person Liable to Pay GST
1	Transportation of passengers by a radio-taxi, motorcab, maxicab and motor cycle	Any person	E-commerce operator
2	Providing accommodation in hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes	Any person except who is liable for registration under sub- section (1) of section 22 of the said CGST Act	E-commerce operator
3	Services by way of house- keeping, such as plumbing, carpentering etc	Any person except who is liable for registration under sub- section (1) of section 22 of the said CGST Act	E-commerce operator

LIABILITY OF TCS ON ECO:

Section 52 of CGST Act, 2017 and Rule 68 and Rule 80 of CGST Rules, 2017, plays a vital role, regarding provision of TCS as applicable on ECO, which I try to narrate in simple language that is as under:

1. That as per section 52(1) of the CGST Act, 2017, that every ECO, shall bound under law to  collect an amount, not exceeding one percent or as may be notified by the government on the recommendation of GST Council, of net value of taxable supply made through it by other suppliers.
2. That for the purpose this section “net value of taxable supply” means the aggregate value of taxable supply of goods or service or both made during any month by all registered person through the ECO, reduced by the aggregate value of taxable supply returned to the supplier during the said month. But this explanation does not include the service supplied through ECO that has been notified u/s 9(5) of the CGST Act, 2017.
3. That as per section 52(3) of the CGST Act, 2017, every ECO is bound to pay the said collected tax in the government account within ten days from the end of the month in which such tax is collected.

RETURN TO BE FILED BY ECO:

1. That as per section 52(4) of the CGST Act, 2017, every ECO is bound under law to furnish a statement, electronically, containing detail of outward supply of goods or services or both effected through it, including returned goods or services or both effected through it and detail of taxes collected, during the month, within ten days from the end of the said month.
2. That commissioner is vested with power to extend the time limit for furnishing such statement as mentioned in the Act through notification by recording a reason in writing.  

   Rule 68 of CGST Rules, 2017, states;

1. That every ECO who is required to collect the tax u/s 52 of CGST Act, 2017, shall furnish a statement in Form GSTR-8, electronically on the common portal, either directly or through the facilitation centre notified by the Commissioner.
2. The detail furnished by ECO in Form GSTR-8, shall reflected in part C of GSTR -2A of concerned supplier, electronically on common portal after the due date of filing of Form GSTR-8.

ANNUAL RETURN TO BE FILED BY ECO:

1. That as per section 52(5) of the CGST Act, 2017, every ECO is bound under law to furnish an annual statement, electronically, containing detail of outward supply of goods or services or both effected through it, including returned goods or services or both effected through it and detail of taxes collected during the financial year, before the thirty first day of December following the end of such financial year.
2. That commissioner is vested with power to extend the time limit, for furnishing such annual statement as mentioned in the Act, on the recommendation of GST council and for the reason be recorded writing.

Rule 80 of CGST Rules, 2017, states; that every ECO, who required to collect tax u/s 52 of CGST Act, 2017, shall bound under law to furnish annual statement as referred in section 52(5) of CGST Act, 2017, in the Form GSTR 9B.

RECTIFICATION OF RETURN BY ECO:

1. That as per section 52(6) of the CGST Act, 2017, if ECO after furnishing of statement, found any omission or incorrect particulars therein, other than as a result of scrutiny, audit, inspection or enforcement activity by tax authority, 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 along with the payment of interest u/s 50(1) of CGST Act, 2017.
2. That GST law provides that no such rectification is allowed in u/s 52(6) of CGST Act, 2017, after furnishing of statement for the month of September of following the end of financial year or annual statement whichever is earlier.

CLAIM OF TCS BY SUPPLIER OF GOODS OR SERVICES OR BOTH:

Section 52(7) of the CGST Act, 2017, states that the supplier of goods or service or both who is supplying the goods or services or both through ECO, is entitled to claim the credit of tax collected by ECO, in his electronic cash ledger.

NOTICE TO ECO AND TIME LIMIT TO REPLY SUCH NOTICE:     

1. That as per section 52(12) of the CGST Act, 2017, any authority not below the rank of Deputy Commissioner, may serve a notice either before or during the course of proceeding under this Act, requiring the operator to furnish such detail relating to;

1. Supply of goods or services or both effected through such operator during any period or;
2. Stock of goods held by the supplier making supply 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. 

2. That as per section 52(13) of the CGST Act, 2017, the ECO is required to furnish the information within 15 days from the date of service of notice u/s 52(12) of CGST Act, 2017.

PENALTY FOR NOT COMPLYING WITH NOTICE:

Section 52(14) of the CGST Act, 2017, if any person who fail to comply with the notice u/s 52(12) of the CGST Act, 2017, shall be liable to penalty which may extend to ₹ 25,000/-, without prejudice to the action that may be taken u/s 122 of the Act.

 

Discussions to this article

[PANKAJ GUPTA]

Hi Yogesh,

Thank you for writing such a comprehensive article.

In my opinion, you should also include implication of Notification No. 65/2017 – Central Tax dated 15th November 2017 in the above article.

Regards,

Pankaj

[abhinav sharma]

I have selling goods from my own website which is runned by me and the sales order which are received are processed from a portal assigned by my IT team to me. Do i need to register myself as an ECO( Reading the act I think I need to register myself as an ECO). Kindly guide me. As i will be registered as an ECO do I need to collect TCS(which i think i should not because I'm selling goods of My own Brand). Kindly guide on the concerned matter of ECO Registration & TCS collection.