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TMI Blog2024 (3) TMI 261X X X X Extracts X X X X X X X X Extracts X X X X ..... ly 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 there ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the following questions:- a. 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? b. 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? 4. Admissibility of the Application: The applicant claimed that the questions on which advance rulings have been sought are with regard to Applicability of a notification issued under the provisions of the CGST/KGST Act 2017 and Whether applicant is required to be registered under the CGST/KGST Act 2017 which are covered under Sections 97(2) (b) and (f) respectively of the CGST Act 2017 and hence the instant application is admissible. 5. BRIEF FACTS O ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e. 6.2 From the plain reading of Section 52, we note that it specifically refers to e-commerce operators, the compliance to be met by them i.e., collection of tax at source, and that, an Agent is excluded from the purview of the said compliance. 6.3 An Electronic Commerce Operator is defined under sub-section (45) of Section 2 of the CGST Act which reads as:- electronic commerce operator means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce; According to Article 2.2.1 of the agreement, the Applicant's obligation is to only provide a platform for transactions between DGIPL and the Customers. 6.4 The difference between an E-Commerce operator and an agent can be corelated with tour operator and travel agent . A tour operator assumes complete responsibility for the package that they offer to sell. They do not sell anybody else's packages, they sell only the package, they themselves have created or put together. And a tour operator is what in law is referred to as a principal , meaning they take responsibility for the package that they create and cover that liability with (usually) an ATOL licence and/or some form of bo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... consumers and they also will instantly grant refunds to the customers, if the customers are not satisfied with the quality of product delivered to them. It is up to the E-commerce operators to recover the loss, if any, from the seller of goods in respect of customer returns; E-commerce operators also have made provision for compensating losses of sellers through seller protection fund, if there is any damage to the products due to the acts or omissions of E-commerce operators. Also E-commerce operators list products sold by multiple sellers on their platform. These E-commerce operators also charge fixed fee / platform fee from sellers for providing E-commerce services to sellers of goods. Your applicant on the other hand, does not assume any responsibility for quality or delivery of digital gold offered to be sold by Digital Gold India Private Limited on its platform; your applicant does not collect any fixed fee /platform fee from DGIPL; it only charges a commission as a percentage of value of digital gold sold. Your applicant offers only the digital gold sold by DGIPL on its platform and is not offering digital gold sold by any other player. In view of the above facts, your appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s clearly demonstrates that, the applicant's platform is merely a conduit for conducting the transaction without having any ownership of the asset i.e., gold. 6.11 With an escrow arrangement in place and daily money transfers to DGIPL directly from Escrow account without intervention or instruction from Jar to banker, it is abundantly clear that the applicant has no influence or control over the exchange of money between customers and DGIPL and the applicant is acting as an Agent for and behalf of DGIPL. Hence, applicant is of the view that, it is operating as an Agent for DGIPL and, as a result, is not required to comply with the provisions of Section 52 of CGST Act. 6.12 To further substantiate our stand, applicant place reliance on the following advance ruling,- Humble Mobile Solutions Private Limited [TS-834-AAR-2019-NT] Section 52 of the CGST Act provides for the conditions on the fulfillment of which an electronic commerce operator will be required to collect tax at source. The provisions of TCS would be triggered in the event of the following: Supply of goods or services or both must be effected by a third-party supplier through an electronic commerce operator The electr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... business and file all the returns through HO, if he does not have place of business in that State. (Sr Nos 5 to 7 of FAQ released by Law Committee of GST Council on 28-9-2018.) Section 24 : Compulsory registration in certain cases.- Notwithstanding anything contained in sub-section (1) of section 22, the following categories of persons shall be required to be registered under this Act,- (x) Every electronic commerce operator [who is required to collect tax at source under section 52;] Thus, an e-commerce operator would require registration only when he is required to collect tax at source under section 52 of the CGST Act. In the case of applicant, provisions of Section 52 of the CGST Act, titled, Collection of Tax at source will not be applicable. Hence, applicant is also not required to obtain registration as an E-commerce operator as the provisions of section 24(x) of the CGST Act, 2017 is not applicable in this case. PERSONAL HEARING PROCEEDINGS HELD ON 03.11.2023 7. Sri. Sandesh Kumar, VP-Corporate Development Finance along with Sri Ravi Kiran R, C A Authorised Representative of the applicant appeared for personal hearing proceedings and reiterated the facts narrated in their ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 13. 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 fro ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f Tax at source and reads as under:- (1) Notwithstanding anything to the contrary contained in this Act, every e-commerce operator (hereinafter in this section referred to as the 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. And Notification No. 52/2018 - Central Tax dtd 20.9.2018 issued under Section 52(1) of CGST Act, notifies the rate of tax, as under:- In exercise of the powers conferred by sub-section (1) of section 52 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendations of the Council, hereby notifies that every electronic commerce operator, not being an agent, shall collect an amount calculated at a rate of half per cent, of the net value of intra-State taxable supplies made through it by other suppliers where the consideration with respect to such supplies is to be collected by the said operator.' From the provisions of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation is collected by the applicant. In fact in the instant case two supplies are involved i.e. (i) supply of gold by DGIPL to the customer through the app and (ii) supply of platform service to the DGIPL by the applicant. The applicant supplies the services of e-commerce platform through the app, for which they get the consideration equivalent to certain percentage on the value of the sale of the gold in the second supply, for which they are charging collecting GST. The issue relevant in the instant case is the first supply i.e. supply of gold by DGIPL to the customer through the app which is considered and duly attended to. 19. The applicant intend to rely on the ruling of this authority in the case of M /s Humble Mobile Solutions Pvt. Ltd., (KAR ADRG 58/2019 dated 19.09.2019). The supply involved in the said case was supply of services by third party to the consumers through the app of the applicant, whereas in the instant case supply is of goods i.e. gold. Further the applicant quoting the submission made in the said case i.e. The electronic commerce operator is not an agent of such third party supplier contends that they are to be seen as a commission agent of DGIPL. The appli ..... 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