GST on Legal advice E-commerce is on the rise by the day! And we get to witness a variety of e-business models adopted by e-commerce operators (ECO, in GST). Broadly these are 3:
- as an Agent, i.e. the ECO provides his e-commerce platform to the suppliers on a commission basis as a %age of Value of supplies.
- by charging Service charges for the e-commerce platform used by the supplier. Since a buyer is free to select from several such ECOs, they are spared any direct charges. But these can be inbuilt in the goods or services purchased through an ECO.
- A prospective customer of goods or services directly selects from the products on display which bear supplier’s tag, and beforehand knows the supplier and the Price. The supplier directly supplies and receives the price. It uses the platform by paying applicable charges and merely avail platform to exhibit and advertise.
- [The ECO may also arrange transportation and may also collect payments for some additional charges].
- as suppliers of goods and services under own (brand) name. E.g. Ola and Uber. The amount is shared by the ECO with the supplier of services or goods that are not known to the recipient of services/ goods.
Thus an e-commerce operator, or ECO as GST calls it, can be a supplier of Goods (when it does so under own brand), Or a supplier of services.
[But does an ECO supplies any goods or services to the consumer (a ‘Recipient’, in GST) in all the Cases? No. It does so only where it is charging the Customer. Otherwise, the service being provided to the supplier, who it charges for the platform provided].
Wherever you charge for any supplies of goods or services you pay GST to the Government as a %age of the Value (generally) of supply. But on the following Goods and Services, an ECO has to pay GST, when it is not a supplier itself and the makes the supplies only ‘through it’. It is ‘reverse charge’:
- Transportation of passengers by a Radio-Taxi, a Motor-cab, a maxi-cab or a motorcycle.
- Accommodation Service in – a hotel, inn, guest house, club, camp-sites or other such commercial places.
- Housekeeping, plumbing, Carpentering,
[ECO is liable to pay GST in the above cases only where such a service provider is not registered. Where registered, the service provider shall itself pay the GST].
The rates applicable are the normal rates. Only the charge has been shifted from the supplier to the conduit. The Value will be determined as per CGST Rules.
An E-commerce Operator (ECO) has to mandatorily get registered. This implies that he has to pay GST on the very first penny he gets in revenue, not only as an ECO but from any other operations it carries out viz. it may have earned some revenue as a transporter of good. A ‘person’ who is registered, has to pay Tax. Tax is payable on the ‘value of Taxable supplies’.
Can an ECO opt for Composition Levy? Composition levy is a fractional rate of Tax but without the facility of Credit (ITC – input tax credit) available for paying the Tax.
More on all these and other aspects, someday next!