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1. E-Commerce
CA Rahul Dhuparh
AM, R&D, Taxmann.com

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E-Commerce

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Relevant Definitions
(44) ‘Electronic commerce’ means the supply of goods or services, including
digital products over a digital or electronic network;
(45) ‘Electronic commerce operator’ means any person who owns, operates
or manages a digital or electronic facility or platform for electronic commerce;
(5) ‘Agent’ means a person, including a factor, broker, commission agent,
arhatia, del-credere agent, an auctioneer or any other mercantile agent, who
carries on the business of supply or receipt of goods or services on behalf of
another;
(13) ‘Intermediary’ means a broker, an agent or any other person, who
arranges or facilitates the supply of goods or services, or securities, between
two or more persons, but does not include a person who supplies such goods
or services or securities on his own account;

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Services listed under section 9(5)
Following 3 services have been notified u/s 9(5) of CGST Act,
 Services by way of transportation of passengers by a radio-taxi, motor-cab,
maxi-cab & motorcycle;
 Services by way of providing accommodation in hotels, inns, guest houses,
clubs, meant for residential or lodging purposes;
 Services by way of house-keeping, such as plumbing, carpentering etc.
Except where the person supplying such service through ECO is liable for
registration u/s 22(1) of the CGST Act;
In all the above 3 cases liability to pay GST is of ECO & not of the actual supplier.

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Registration of an ECO.
Section 24: Mandatory Registration
(iv) Persons who are required to pay tax u/s 9(5);
(ix) Persons who supply goods or services*, other than section 9(5), through
such ECO who is required to collect TCS u/s 52;
(x) Every ECO ‘who is required to collect TCS u/s 52’; (Inserted by CGST Amendment Act)
(xi) Every person supplying OIDAR services from a place outside India to a
person in India, other than a registered person
*N/N.65/2017-CT, Dated 15-11-2017

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Is every one making supplies through ECO required to be
registered?
For Goods: Irrespective of their turnover limit, suppliers are mandatorily
required to get registered in order to make supplies through an ECO.
For Services*: Through special exemptions {except services of section 9(5)}
Suppliers are allowed to supply services up-to Rs. 20/10 lakhs, through an
ECO.
Since such suppliers are not liable for registration, ECO are not required to
collect TCS on supply of services being made by such suppliers through their
portal.
*N/N.65/2017-CT, Dated 15-11-2017.

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Liability to pay GST in case of ECO
 Who is liable to pay tax for the goods or services supplied by a
supplier through ECO?
Generally, supplier of goods or services is required to pay GST, except
services covered by Sec 9(5) for which ECO is required to pay GST in respect
of those services, taking an assumption that these services are supplied by
such ECO not by the actual supplier & all the provisions of GST shall apply to
such ECO.
*Notification No. 17/2017-Central Tax (Rate), Dated 28-6-2017

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Place of Supply of Services
There are two legs involved in a single transaction executed through a third
party ECO.
 Services provided by ECO to the Supplier (against commission charged by ECO);
 Goods or Services provided by the Supplier to the actual recipient.
For determining the place of supply following two aspects are required to be
taken into consideration:
 If Both the Supplier and the Recipient are located in India.
 If either the Supplier or the Recipient is located outside in India.

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If Both the Supplier & the Recipient are located in India.
The POS for such services shall be determined as per the general rule i.e., Section
12(2) of the IGST Act.
 Supplies made to a registered person (B2B)
Then the location of such registered person shall be the place of supply.
Example, Mr. R (Registered person) supplied watches through ECO worth Rs. 100,000 in the
month of July, 2019. ECO has charged commission of 5% i.e., Rs 5,000 on total sales value,
The Place of supply for the commission charged by the ECO shall be the location of Mr. R.

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If Both the Supplier & the Recipient are located in India.
 Supplies made to an un-registered person (B2C)
 Where the address of such un-registered person is available.
Then such address shall be taken to be the place of supply for such services.
Example, In the previous example, assuming Mr. R is an un-registered person and supplying
books through such ECO, in this case, for the commission charged by the ECO, the place of
supply shall be the location of Mr. R, as he would have given at the time of becoming seller
with such ECO.
 Where the address of such un-registered person is not available.
Then the location of the supplier of services shall be taken to be the place of supply.

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If either the Supplier or the Recipient is located outside in India.
The place of Supply for such services shall be determined as per the general rule i.e.,
Section 13(2) of the IGST Act.
 Location of recipient is available;
The place of supply for such services shall be the location of the recipient of services.
Example, Mr. R supplied watches through a foreign ECO worth Rs. 100,000 in the month of
July, 2019. ECO has charged commission of 5% i.e., Rs 5,000 on total sales value, The Place
of supply for the commission charged by the ECO shall be the location of Mr. R.
 Location of recipient is not available;
The place of supply in this case shall be the location of supplier of services.

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Applicability of TCS from October 1, 2018*
Relevant Section & Rules of the CGST Act.
Reference Description
Section 52 Collection of Tax at Source
Rule – 67 Form & Manner of submission of statement of supplies through an ECO.
Rule – 78 Matching of Details furnished by ECO with the details furnished by the
supplier (GSRT 8 & GSTR 1)
Rule – 79 Communication & Rectification of discrepancy in details furnished by the
ECO and the supplier (GST MIS 3 & 4)
Rule – 80 Annual Return
*N/N .51/2018-CT, dated 13-9-2018

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Q &Afor to TCS,
 Is every ECO required to collect TCS?
Every ECO, not being an agent, shall collect TCS, of the net value of taxable supplies made through
it by other suppliers where the consideration with respect to such supplies is to be collected by the
operator.
1 exception, i.e., Supplier of services listed u/s 9(5).
 Rate at which TCS is required to be collected by ECO?
ECO shall collect TCS at the rate of 1%* of the net value of taxable supplies made through it, where
consideration with respect to such supplies is collected by it.
 Is there any exemption on Gold, as the rate of GST is only 3% and TCS on it
would erode the margin for the seller?
No such exemption from TCS has been granted.
*N/N.52/2018-CT & 2/2018-IT, dated 20-9-2018

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Q &Afor to TCS,
 Can an ECO pay the amount of TCS collected to the government using the
ITC available with them?
The amount as collected by the ECO shall be deposited with the Government in cash only. There is no
provision of paying TCS collected by ECO through utilizing ITC available with them.
 Under multiple e-commerce model, Customer books a Hotel via ECO-1 who
in turn is collaborates with ECO-2 who has agreement with the hotelier. In
this case, ECO-1 will not have any GST information of the hotelier. Under
such circumstances, which ECO should be liable to collect TCS?
TCS is to be collected by that ECO who is making payment to the supplier for the particular supply,
which is in this case will be ECO-2.

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Q &Afor to TCS,
 Compliances to done by such ECO.
The TCS collected by the ECO shall be deposited by the 10th of the following month, during which
collection is made. He shall furnish a statement in form GSTR-8, on monthly basis containing details of
supplies effected through it.
Also, he is required to file Annual Statement in form GSTR-9B by 31st December following the end of
every financial year. (However till date no such form has been notified).
 Compliances to done by Supplier supplying through ECO.
Such supplier shall be complying with the required compliances in the normal fashion i.e., The amount
of TCS collected and paid by the ECO shall be reflected in suppliers GSTR-2A, the same gets
transferred to the cash ledger of the said supplier, which can be used at the time of discharge of tax
liability in respect of the supplies made him.

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