GST Developments w.r.t. E-Commerce Operators

Introduction:

The GST law applies to all businesses, including e-commerce operators. E-commerce operators are defined as any person who owns, operates, or manages digital or electronic facility or platform for e-commerce. This includes online marketplaces, auction websites, and other platforms that facilitate the sale of goods or services by third-party sellers. E-commerce operators have a number of obligations under the GST law including registering themselves as a tax payer, registering themselves as collector of tax, ensuring that tax is collected on supplies made through its digital marketplace and also ensuring the same as paid within time.

The lawmakers have been trying their level best to simplify the tax code and built mechanism to ensure robust collection of taxation and at the same time identify and deter instances of tax evasion. In their attempt to simplify and clarify certain aspects new notifications have been issued with regards to providing relief from registration to persons supplying through E-commerce operators and also providing detailed guidelines for composition dealers who supply their goods or services through these E-commerce operators.

Exemption from obtaining registration-

Vide CGST Notification 34/2023 dt. 31.07.2023 issued under section 23(2) relaxation has been provided from obtaining registration where their aggregate turnout during the preceding financial year or during the current financial year does not exceed the threshold limit specified u/s 22(1) ven if they are engaged in making supplies of goods through an Electronic commerce operator who is required to collect tax at source under section 52. Such exemption is subject to the following conditions and obligations-

(i) such persons shall not make any inter-State supply of goods;

(ii) such persons shall not make supply of goods through electronic commerce operator in more than one State or Union territory;

(iii) such persons shall be required to have a Permanent Account Number issued under the Income Tax Act, 1961 (43 of 1961);

(iv) such persons shall, before making any supply of goods through electronic commerce operator, declare on the Common portal their Permanent Account Number issued under the Income Tax Act, 1961 (43 of 1961), address of their place of business and the State or Union territory in which such persons seek to make such supply, which shall be subjected to validation on the Common portal;

(v) such persons have been granted an enrolment number on the Common portal on successful validation of the Permanent Account Number declared as per clause (iv);

(vi) such persons shall not be granted more than one enrolment number in a State or Union territory;

(vii) no supply of goods shall be made by such persons through electronic commerce operator unless such persons have been granted an enrolment number on the Common portal; and

(viii) where such persons are subsequently granted registration under section 25 of the said Act, the enrolment number shall cease to be valid from the effective date of registration.

Simply speaking before making supplies through E commerce operator assessee is required to declare his tan on the GST Common portal along with details of address and state from which the business shall be carried on. Post which an enrolment number shall be provided to the assessee and such enrolment number has to be declared to the E commerce operator before making supplies through it.

Conditions specified is Notification No.37/2023–Central Tax Dated: 4th August, 2023 are illustrated as under-

“(i) the Electronic commerce operator shall allow the supply of goods through it by the said person only if enrolment number has been allotted on the Common portal to the said person;

(ii) the Electronic commerce operator shall not allow any inter-State supply of goods through it by the said person;

(iii) the Electronic commerce operator shall not collect tax at source under sub-section (1) of section 52 in respect of supply of goods made through it by the said person; and

(iv) the Electronic commerce operator shall furnish the details of supplies of goods made through it by the said person in the statement in FORM GSTR-8 electronically on the Common portal.

2. Where multiple Electronic commerce operators are involved in a single supply of goods through Electronic commerce operator platform, “the electronic commerce operator” shall mean the Electronic commerce operator who finally releases the payment to the said person for the said supply made by the said person through him.”

Special procedure for Composition Dealers-

Further notification has been issued providing procedures for compliance in case of persons who intend to supply through their digital medium using the enrolment number provided to them. Relevant extracts from Notification No.37/2023–Central Tax Dated: 4th August, 2023 is reproduced as under for ready reference-

“(i) the Electronic commerce operator shall allow the supply of goods through it by the said person only if enrolment number has been allotted on the Common portal to the said person;

(ii) the Electronic commerce operator shall not allow any inter-State supply of goods through it by the said person;

(iii) the Electronic commerce operator shall not collect tax at source under sub-section (1) of section 52 in respect of supply of goods made through it by the said person; and

(iv) the Electronic commerce operator shall furnish the details of supplies of goods made through it by the said person in the statement in FORM GSTR-8 electronically on the Common portal.

2. Where multiple Electronic commerce operators are involved in a single supply of goods through Electronic commerce operator platform, “the electronic commerce operator” shall mean the Electronic commerce operator who finally releases the payment to the said person for the said supply made by the said person through him.”

Through this mechanism a person who is not registered is also allowed to make intra state supplies through digital medium and it has also been provided that no tax shall be collected from such persons.

Similar notification has been issued to prescribe procedure for enrolment of composition dealers by the E commerce operator on their digital platform. Such a move strengthens the government’s commitment of ease of doing business and allowing small businessmen to benefit from the digital revolution. Conditions prescribed through Notification No.36/2023–Central Tax Dated: 4th August, 2023 is illustrated as under-

“(i) the Electronic commerce operator shall not allow any inter-State supply of goods through it by the said person;

(ii) the Electronic commerce operator shall collect tax at source under sub-section (1) of section 52 of the said Act in respect of supply of goods made through it by the said person and pay to the Government as per provisions of sub-section (3) of section 52 of the said Act; and

(iii) the electronic commerce operator shall furnish the details of supplies of goods made through it by the said person in the statement in FORM GSTR-8 electronically on the Common portal.”