Ch 37 - Electronic Commerce | GST Saral by CA Dhruv Aggarwal PDF Download

 Page 1


CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
 
 
 
 
 
 
 
 
 
 
CHAPTER 37 - El ectroni c Commerce 
 
 
 
 
 
 
 
 
 
37.1 Background 
CHAPTER 37 
 
Electronic Commerce 
 
Electronic commerce is growing at a fast pace. Amazon, Flipkart, Uber etc. are doing e-commerce business in 
big scale. 
This is a new cha lenge to tax authorities. 
 
In e-commerce, order for supply of goods or services is placed through portal. The e-commerce companies 
pass on these orders to actual suppliers of goods and services. Supply of goods are services is done by third 
party unknown to the person placing order. 
So far, e-commerce companies were not liable to pay Vat or CST as they were not se ling goods. Recently, 
the services provided through portal were brought under service tax net. 
Now, e-commerce companies se ling goods on portal are being made liable to co lect 1% GST at source. 
 
This 1% TCS (Tax Co lected at Source) seems to be mainly for control purposes, as balance GST will be 
paid by the actual supplier of goods or services. 
The actual supplier can take credit of this TCS paid by e-commerce operator. 
 
In  case   of  supply  of  specified   services,   the   e-commerce   operator   will  be   liable   to   pay  entire 
IGST/CGST/SGST on such services- section 5(5) of IGST Act and section 9(5) of CGST Act. 
 
'Electronic commerce' means supply of goods or services or both including digital products over digital or 
electronic network - section 2(44) of CGST Act. 
'Electronic commerce operator' means any person who owns, operates or manages digital or electronic facility 
or platform for electronic commerce - section 2(45) of CGST Act. 
37.2 Tax Collection at Source(TCS) by electronic commerce operator 
 
Notwithstanding  anything  to  the  contrary  contained  in  the  Act,  every  electronic  commerce  operator 
(hereinafter referred to in this section as the "operator"), not being an agent, shall co lect an amount calculated 
at such rate not exceeding one per cent, as may be notified by Government, of the net value of taxable supplies 
made through it by other suppliers where the consideration with respect to such supplies is to be co lected by 
the operator. 
Explanation.—For the purposes of this sub-section, 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) of CGST Act, made during any month by a l registered taxable persons through the operator reduced by 
the aggregate value of taxable supplies returned to the suppliers during the said month - section 52(1) of 
CGST Act. 
Supplier can take credit of TCS paid by e-commerce operator - The supplier who has supplied the goods 
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CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
 
 
 
 
 
 
 
 
 
 
CHAPTER 37 - El ectroni c Commerce 
 
 
 
 
 
 
 
 
 
37.1 Background 
CHAPTER 37 
 
Electronic Commerce 
 
Electronic commerce is growing at a fast pace. Amazon, Flipkart, Uber etc. are doing e-commerce business in 
big scale. 
This is a new cha lenge to tax authorities. 
 
In e-commerce, order for supply of goods or services is placed through portal. The e-commerce companies 
pass on these orders to actual suppliers of goods and services. Supply of goods are services is done by third 
party unknown to the person placing order. 
So far, e-commerce companies were not liable to pay Vat or CST as they were not se ling goods. Recently, 
the services provided through portal were brought under service tax net. 
Now, e-commerce companies se ling goods on portal are being made liable to co lect 1% GST at source. 
 
This 1% TCS (Tax Co lected at Source) seems to be mainly for control purposes, as balance GST will be 
paid by the actual supplier of goods or services. 
The actual supplier can take credit of this TCS paid by e-commerce operator. 
 
In  case   of  supply  of  specified   services,   the   e-commerce   operator   will  be   liable   to   pay  entire 
IGST/CGST/SGST on such services- section 5(5) of IGST Act and section 9(5) of CGST Act. 
 
'Electronic commerce' means supply of goods or services or both including digital products over digital or 
electronic network - section 2(44) of CGST Act. 
'Electronic commerce operator' means any person who owns, operates or manages digital or electronic facility 
or platform for electronic commerce - section 2(45) of CGST Act. 
37.2 Tax Collection at Source(TCS) by electronic commerce operator 
 
Notwithstanding  anything  to  the  contrary  contained  in  the  Act,  every  electronic  commerce  operator 
(hereinafter referred to in this section as the "operator"), not being an agent, shall co lect an amount calculated 
at such rate not exceeding one per cent, as may be notified by Government, of the net value of taxable supplies 
made through it by other suppliers where the consideration with respect to such supplies is to be co lected by 
the operator. 
Explanation.—For the purposes of this sub-section, 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) of CGST Act, made during any month by a l registered taxable persons through the operator reduced by 
the aggregate value of taxable supplies returned to the suppliers during the said month - section 52(1) of 
CGST Act. 
Supplier can take credit of TCS paid by e-commerce operator - The supplier who has supplied the goods 
CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
or services or both through the electronic commerce operator shall claim credit, in his electronic cash ledger, 
of the amount co lected and reflected in the statement of the operator furnished under section 52(4), in the 
manner as may be prescribed - section 52(7)of CGST Act. 
Amount  collected by e-commerce  operator  to be paid to Government  - The amount co lected by e- 
commerce operator under section 52(1)shall be paid to the credit of the Government by the operator within 
ten days after the end of the month in which such co lection is made, in the manner prescribed - section 52(3) 
of CGST Act. 
E-commerce Operator to submit statement to Government  every month - Every operator sha l, furnish a 
statement,  electronica ly, of a l amounts co lected towards outward supplies of goods or services or both 
effected through it, including supplies of goods or services or both returned to it, and the amount co lected 
under section 52(1) of CGST Act during a calendar month, within ten days after the end of such calendar 
month - section 52(4) of CGST Act. 
The statement can be rectified by e-commerce operator. He is required to pay tax with interest in such case. 
However, such rectification is not possible after due date of furnishing statement for the month of September 
fo lowing the end of financial year or the actual date of furnishing relevant annual statement, whichever is earlier 
- section 52(6) of CGST Act. 
 
Annual   Statement   by e-commerce  operator  -  The  e-commerce  operator  is  required  to  f ile  Annual 
Statement before 31st December of fo lowing financial year, giving specified details - section 52(5) of CGST 
Act. 
Matching  of statement  of e-commerce operator  and credit taken by supplier - The details of supplies 
and the amount co lected furnished by e-commerce operator shall be matched with the corresponding details 
of outward  supplies  furnished  by the concerned  supplier  registered  under CGST,  in prescribed  manner- 
section 52(8) of CGST Act. 
Discrepancy  between the details of operator  and  supplier  - Where the details of outward supply, on 
which the tax has been co lected, as declared by the operator do not match with the corresponding details 
declared by the supplier, the discrepancy shall be comm unicated to both persons in prescribe manner- section 
52(9) of CGST Act. 
 
If the discrepancy is not rectified, it shall be added to the output liability of the said supplier for the calendar 
month succeeding the calendar month in which the discrepancy is communicated. 
The concerned supplier shall be liable to pay the tax payable in respect of such supply along with interest on 
the amount so added from the date such tax was due ti l the date of its payment - section 52(10) of CGST 
Act. 
The concerned supplier shall pay the tax payable with interest on the amount added to his turnover under 
section 52(10) - section 52(11) of CGST Act. 
'Concerned supplier' shall mean the supplier of goods or services or both making supplies through the e- 
commerce operator - explanation to section 52 of CGST Act. 
37.3 E-commerce operator to furnish details  when called for 
 
Any authority not below the rank of Deputy Commissioner may, by notice, either before or during the course 
of any proceeding under this Act, require the operator to furnish such details relating to—(a) supplies of goods 
or services or both effected  through such operator during any period,  or(b) stock of goods held by the 
suppliers making supplies through such operator in the godowns or warehouses, by whatever name ca led, 
managed  by such operators  and declared  as additional places  of business  by such suppliers  as may be 
Page 3


CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
 
 
 
 
 
 
 
 
 
 
CHAPTER 37 - El ectroni c Commerce 
 
 
 
 
 
 
 
 
 
37.1 Background 
CHAPTER 37 
 
Electronic Commerce 
 
Electronic commerce is growing at a fast pace. Amazon, Flipkart, Uber etc. are doing e-commerce business in 
big scale. 
This is a new cha lenge to tax authorities. 
 
In e-commerce, order for supply of goods or services is placed through portal. The e-commerce companies 
pass on these orders to actual suppliers of goods and services. Supply of goods are services is done by third 
party unknown to the person placing order. 
So far, e-commerce companies were not liable to pay Vat or CST as they were not se ling goods. Recently, 
the services provided through portal were brought under service tax net. 
Now, e-commerce companies se ling goods on portal are being made liable to co lect 1% GST at source. 
 
This 1% TCS (Tax Co lected at Source) seems to be mainly for control purposes, as balance GST will be 
paid by the actual supplier of goods or services. 
The actual supplier can take credit of this TCS paid by e-commerce operator. 
 
In  case   of  supply  of  specified   services,   the   e-commerce   operator   will  be   liable   to   pay  entire 
IGST/CGST/SGST on such services- section 5(5) of IGST Act and section 9(5) of CGST Act. 
 
'Electronic commerce' means supply of goods or services or both including digital products over digital or 
electronic network - section 2(44) of CGST Act. 
'Electronic commerce operator' means any person who owns, operates or manages digital or electronic facility 
or platform for electronic commerce - section 2(45) of CGST Act. 
37.2 Tax Collection at Source(TCS) by electronic commerce operator 
 
Notwithstanding  anything  to  the  contrary  contained  in  the  Act,  every  electronic  commerce  operator 
(hereinafter referred to in this section as the "operator"), not being an agent, shall co lect an amount calculated 
at such rate not exceeding one per cent, as may be notified by Government, of the net value of taxable supplies 
made through it by other suppliers where the consideration with respect to such supplies is to be co lected by 
the operator. 
Explanation.—For the purposes of this sub-section, 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) of CGST Act, made during any month by a l registered taxable persons through the operator reduced by 
the aggregate value of taxable supplies returned to the suppliers during the said month - section 52(1) of 
CGST Act. 
Supplier can take credit of TCS paid by e-commerce operator - The supplier who has supplied the goods 
CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
or services or both through the electronic commerce operator shall claim credit, in his electronic cash ledger, 
of the amount co lected and reflected in the statement of the operator furnished under section 52(4), in the 
manner as may be prescribed - section 52(7)of CGST Act. 
Amount  collected by e-commerce  operator  to be paid to Government  - The amount co lected by e- 
commerce operator under section 52(1)shall be paid to the credit of the Government by the operator within 
ten days after the end of the month in which such co lection is made, in the manner prescribed - section 52(3) 
of CGST Act. 
E-commerce Operator to submit statement to Government  every month - Every operator sha l, furnish a 
statement,  electronica ly, of a l amounts co lected towards outward supplies of goods or services or both 
effected through it, including supplies of goods or services or both returned to it, and the amount co lected 
under section 52(1) of CGST Act during a calendar month, within ten days after the end of such calendar 
month - section 52(4) of CGST Act. 
The statement can be rectified by e-commerce operator. He is required to pay tax with interest in such case. 
However, such rectification is not possible after due date of furnishing statement for the month of September 
fo lowing the end of financial year or the actual date of furnishing relevant annual statement, whichever is earlier 
- section 52(6) of CGST Act. 
 
Annual   Statement   by e-commerce  operator  -  The  e-commerce  operator  is  required  to  f ile  Annual 
Statement before 31st December of fo lowing financial year, giving specified details - section 52(5) of CGST 
Act. 
Matching  of statement  of e-commerce operator  and credit taken by supplier - The details of supplies 
and the amount co lected furnished by e-commerce operator shall be matched with the corresponding details 
of outward  supplies  furnished  by the concerned  supplier  registered  under CGST,  in prescribed  manner- 
section 52(8) of CGST Act. 
Discrepancy  between the details of operator  and  supplier  - Where the details of outward supply, on 
which the tax has been co lected, as declared by the operator do not match with the corresponding details 
declared by the supplier, the discrepancy shall be comm unicated to both persons in prescribe manner- section 
52(9) of CGST Act. 
 
If the discrepancy is not rectified, it shall be added to the output liability of the said supplier for the calendar 
month succeeding the calendar month in which the discrepancy is communicated. 
The concerned supplier shall be liable to pay the tax payable in respect of such supply along with interest on 
the amount so added from the date such tax was due ti l the date of its payment - section 52(10) of CGST 
Act. 
The concerned supplier shall pay the tax payable with interest on the amount added to his turnover under 
section 52(10) - section 52(11) of CGST Act. 
'Concerned supplier' shall mean the supplier of goods or services or both making supplies through the e- 
commerce operator - explanation to section 52 of CGST Act. 
37.3 E-commerce operator to furnish details  when called for 
 
Any authority not below the rank of Deputy Commissioner may, by notice, either before or during the course 
of any proceeding under this Act, require the operator to furnish such details relating to—(a) supplies of goods 
or services or both effected  through such operator during any period,  or(b) stock of goods held by the 
suppliers making supplies through such operator in the godowns or warehouses, by whatever name ca led, 
managed  by such operators  and declared  as additional places  of business  by such suppliers  as may be 
CA DHRUV AGRAWAL – National Chairman Taxation Committee-All India Confederation of Small & Micro Industries Association  
 
 
specified in the notice - section 52(12) of CGST Act. 
 
Every operator on whom a notice has been served shall furnish the required information within five working 
days of the date of service of such notice - section 52(13) of CGST Act. 
Penalty for not furnishing information - Any person who fails to furnish the information required by the 
notice sha l, without prejudice to any action that is or may be taken under section 66, be liable to a penalty 
which may extend to rupees twenty-five thousand - section 52(14) of CGST Act. 
37.4 Tax on services by electronic commerce operator 
 
The Central 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. A l the provisions of the CGST/IGST 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 - 
section 5(5) of IGST Act and section 9(5) of CGST Act. 
Where entire tax is payable by e-commerce operator, persons who supply goods or services or both, through 
such electronic commerce operator are not required to register under GST - section 24(ix) of CGST Act. 
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 - first proviso to section 5(5) of IGST Act and section 9(5) of CGST Act. 
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 - second 
proviso to section 5(5) of IGST Act and section 9(5) of CGST Act.