9911796707
TMI Blog2024 (3) TMI 261X X X X Extracts X X X X X X X X Extracts X X X X ..... eement") with Digital Gold India Private Limited (hereinafter referred to as "DGIPL" or "seller") for offering sale of DGIPL's gold on its platform. DGIPL is a company which offers Digital Gold products and distributes through a wide range of channel partners such as Tanishq, Axis Bank, Tata Neu, Bajaj Finserv, Airtel Payments bank, Fino payments bank, Amazon, Flipkart, Phone pe and such other large players; the users of applicant's platform can save and invest money in digital gold offered by DGIPL; Digital gold is a non-custodial form of owning gold which is vaulted by the seller. The applicant, at present, has been offering only Digital Gold offered by Digital Gold India Private Limited on their platform from the launch of their platform and have not been offering any other product offered by any other player. 3. In view of the above, the applicant has sought advance ruling in respect of 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&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on. The said commission is calculated based on a percentage of the monthly transactions undertaken on the platform instead of a flat fee. The applicant collects and pays GST in respect of their commission income. 6. Applicant's Interpretation of Law: Question 1: 6.1 In the given case, the applicant is only providing a platform facilitating transaction of sale of digital gold. Gold and other products transacted on the platform are owned and offered for sale by DGIPL and not by applicant. As per clause 1.1.10 of the agreement, platform means and includes the application by the name and style of "ChangeJar" or "Jar" App, that the Customer accesses for the transactions, i.e. for the purchase and sale of gold, including all other contents, services and technology offered through the Platform. It is relevant to analyse the following sections to conclude on the applicability of the provision of collection of tax at source. 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 Electroni ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ESSLY UNDERSTAND AND AGREE THAT COMPANY IS ONLY A DISTRIBUTOR THAT FACILITATES USERS TO BUY GOLD FROM SAFE GOLD. YOU UNDERSTAND THAT BY REGISTERING TO THE PLATFORM AND / OR ACCESSING SERVICES DIRECTLY OR INDIRECTLY FROM THE PLATFORM, YOU ONLY RECEIVE THE ABILITY TO USE THE PLATFORM FOR PURCHASE OF GOLD FROM SAFE GOLD OR SUCH OTHER PRODUCTS OFFERED BY US FROM TIME TO TIME. WE SHALL NOT INCUR ANY LIABILITY IN RELATION TO ANY DISPUTE RELATING THAT ARISES IN RELATION TO PURCHASE OF GOLD OR SERVICES OFFERED BY SAFE GOLD. YOU EXPRESSLY AGREE THAT WE ARE NOT RESPONSIBLE FOR CUSTODY, QUANTITY AND QUALITY OF PHYSICAL GOLD THAT YOU PURCHASE THROUGH THE PLATFORM AND HENCE WE SHALL NOT BE LIABLE IN CASE OF ANY DISPUTE THAT ARISES IN RELATION TO CUSTODY OF PHYSICAL GOLD WITH THE CUSTODIAN AND TRUSTEESHIP WITH THE TRUSTEE ADMINISTRATOR. 6.6 E-commerce operators such as Amazon and Flipkart take the responsibility for delivering the product to ultimate 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 r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ld to the customers, thus any dispute pertaining to such transaction shall be between the customer and DGIPL. The applicant is not responsible for any such transaction in any respect. 6.9 The consideration for provision of supply to Jar is in the form of a "commission" paid by DGIPL; DGIPL also deducts Income Tax TDS under Section 194H of the Indian Income Tax Act, 1961, which applies to payment of commission to an agent [a person acting on behalf of another person for services rendered, not being professional services]. 6.10 Further, it is evident from the invoice that, it is DGIPL and not the applicant issuing invoice upon the customer. It is clear from the interpretation of the observations made in Para 6 & 7 that DGIPL, not the company, bears the risk and reaps the gain of the sale of gold. The applicant is under no obligation to participate in the sale or quality control. The applicant's responsibility is restricted to platform management. This 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... through Jar platform, this fact has been very clearly brought out in the terms and conditions of sale mentioned on the Jar website, as mentioned in point 5 of our interpretation of the facts of the case. Your applicant qualifies as a "selling agent" of DGIPL within the meaning of Section 2(5) of CGST Act, 2017, going by the terms of engagement and "Commission" being the nature of consideration received by your applicant, irrespective of the miscellaneous clause 9.4 of the agreement, which intends to clarify the contractual obligation of the parties. 6.15 Question 2: Every electronic commerce operator irrespective of his turnover, has to compulsorily register as per provisions of section 24(x) of CGST Act, 2017. This registration is in addition to and separate from GST registration obtained as normal supplier. Electronic Commerce Operator is required to obtain GST Registration in each State If he has suppliers in different States. However, he can indicate his head office as place of 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 : Compul ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... gard to the first question, stated that DGIPL (seller) shall be responsible for the authenticity and quality of gold being provided to customers on the platform; they merely provide the platform to customers, for selling DGIPL's gold, and thus any dispute pertaining to such transaction is to be between the customer & DGIPL; they are not responsible for any such transaction in any respect; they shall receive a commission from DGIPL at the end of each month; they issue a Tax invoice on DGIPL for receipt of commission, which is calculated based on a percentage of the monthly transactions undertaken on the platform instead of a flat fee. The applicant collects and pays GST in respect of their commission income. 12. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... that deals with the relationship between the applicant and M/s DGIPL specifies as under:- 1. "The parties shall act in all matters as independent contractors"; 2. "Neither party shall have any authority hereunder, express or implied to contract on behalf of the other party with any person shall not hold itself out as having such powers or authority" 3. "The agreement is entered into on principal-to-principal basis and does not and shall not be deemed to make either party an agent, partner of joint venture, partner of the other or any analogous relationship". In view of the above clause, it is clearly evident that neither the applicant nor the DGPIL are agent to each other and thus the contention of the applicant that they qualify as agent to M/s DGIPL is not acceptable and not tenable under the law. Since the sale of DGIPL products happen through the applicants online platform, the applicant squarely fits into the definition and qualifies to be an Electronic Commerce Operator. 17. Section 52 of the CGST Act, 2017 deals with "Collection of Tax at source" and reads as under:- "(1) Notwithstanding anything to the contrary contained in this Act, every e-commerce operator (he ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... i.e., the sale of goods is effected through the online platform of the applicant; (vi) The consideration towards supply of gold is collected, through the app, by the applicant into an escrow account, which is a joint account of applicant & the seller of gold (DGIPL) meant for specifically to deal with the supply of gold. In view of the above, since all conditions of Section 52 are satisfied, the applicant is liable to collect the tax u/s 52 of the CGST Act 2017 read with Notification 52/2018-CT(R) on the net value of the taxable supply. 18. The applicant appears to heavily rely on the issue of assumption of responsibility of the supply of gold by M/s DGIPL; that in comparison with other e-commerce operators such as Amazon, they do not assume any responsibility with regard to supply of gold i.e. they do not compensate/pay for the damages that may arise during the delivery. Post sale conditions such as responsibility of delivery of digital gold, vaulting of gold, etc., does not alter the fact that the sale of product is done through the applicants platform and that the sale consideration is collected by the applicant. In fact in the instant case two supplies are involved i.e. (i ..... X X X X Extracts X X X X X X X X Extracts X X X X
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