TAX COLLECTED AT SOURCE BY ELECTRONIC COMMERCE OPERATOR

GST Update 07.07.2016

GST DAILY DOSE OF UPDATION:-

TAX COLLECTED AT SOURCE BY ELECTRONIC COMMERCE OPERATOR:- ‘Electronic Commerce Operator’ ECO shall include every person who, directly or indirectly, owns, operates or manages an electronic platform that is engaged in facilitating the supply of any goods and/or services or in providing any information or any other services incidental to or in connection there with but shall not include persons engaged in supply of such goods and/or services on their own behalf. This is different from the ‘aggregator’ in the sense that in case of aggregator, there is provision of service under the brand/trade name of aggregator. It is submitted that although reverse charge mechanism is applicable on the aggregator but in case of Electronic Commerce Operator, the mechanism of Tax Collected at Source is applicable.

It is provided in that Notwithstanding anything to the contrary contained in the Act or in any contract, arrangement or memorandum of understanding, every electronic commerce operator shall, at the time of credit of any amount to the account of the supplier of goods and/or services or at the time of payment of any amount in cash or by any other mode, whichever is earlier, collect an amount, out of the amount payable or paid to the supplier, representing consideration towards the supply of goods and /or services made through it, calculated at such rate as may be notified in this behalf by the Central/State Government on the recommendation of the Council. The amount collected by ECO shall be paid to the credit of the appropriate Government by ECO within ten days after the end of the month in which such collection is made. It is pertinent to note that the liability to pay tax has been fastened on the ECO irrespective of any contract or memorandum of understanding. This means that if the tax has been discharged by the supplier, even then, the ECO can be held liable to pay tax as the liability to pay tax under the Laws is that of ECO. This problem is being presently observed in cases where reverse charge mechanism is applicable. However, there are judicial pronouncements that have held that if service tax is already paid by service provider in terms of contract, although the liability to pay service tax under law is that of service recipient, even then, service tax cannot be demanded twice on the same transaction. However, the ‘Non-Obstante’ Clause inserted in the GST for TCS provisions seeks to nullify such judicial pronouncements. Hence, tax is to be collected and paid by ECO and not by the supplier.

Apart from paying the collected tax, ECO shall be liable to furnish a statement, electronically, of all amounts collected towards outward supplies of goods and/or services effected through it, during a calendar month within ten days after the end of such calendar month. The statement shall contain, the details of the amount collected on behalf of each supplier in respect of all supplies of goods and/or services effected through the operator and the details of such supplies during the said calendar month.

Any amount collected and paid to the credit of the appropriate Government shall be deemed to be a payment of tax on behalf of the concerned supplier and the supplier shall claim credit, in his electronic cash ledger, of the tax collected and reflected in the statement of the operator.

The details of supplies and the amount collected during a calendar month and furnished by every operator shall be matched with the corresponding details of outward supplies furnished by the concerned supplier in his valid return for the same calendar month or any preceding calendar month.

Where the details of outward supply, on which the tax has been collected, as declared by the operator do not match with the corresponding details declared by the supplier, the discrepancy shall be communicated to both persons in the manner and within the time as may be prescribed. The value of a supply relating to any payment in respect of which any discrepancy is communicated and which is not rectified by the supplier in his valid return for the month in which discrepancy is communicated 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.

Thereafter, the concerned supplier shall, in whose output tax liability any amount has been added 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 till the date of its payment.

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GST Update 07.07.2016

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