E-COMMERCE: UNDERSTANDING THE IMPLICATIONS OF GST ON E-COMMERCE BUSINESSES AND ONLINE MARKETPLACES

INTRODUCTION E-commerce is a promising economic development of the 21st century that has the potential to improve global equality of life and economic well-being. It can spur growth and employment in industrialized,emerging, and developing countries. In India, e- commerce is on a steady rise and is predicted to reach US $99 billion by 2024, with significant investments from global companies like Facebook and Google. The Central board of excise and customes (CBEC) has recognized the industry's potential and the tax complexities, including unique rules for e-commerce GST registration. GST is a multistage, comprehensive, destination-based tax applied at the end place of consumption, collected at every stage of sale or purchase. Under the GST regime, all e- commerce transactions are covered, resolving the previous lack of legislation in India. E- commerce refers to buying and selling goods or services, as well as the movement of money and data to complete transactions, and hasredefined the traditional definition of a market. E-COMMERCE INDIAN PERSPECTIVE In India, E-Commerce Transaction are governed by various statutes, some of which are: 1. Income Tax Act, 1961. 2. Consumer Protection Act, 1986 3. Information Technology Act.2000. 4. Payment of Settlement Systems Act, 2007. 5. Foreign Exchange Management Act, 2000. 6. Competition Act, 2002. 7. Companies Act, 2013.

APPLICABILITY OF E-COMMERCE UNDER GST ACT, 2017.

General Meaning of E-Commerce: Basically, E-Commerce refers to any electronic way of supply of products and services over the internet. In legal term it is defined under Section 2(44) of the CGST Act, 2017 defines e-commerce as the supply of goods or services or both, including digital products over digital or anelectronic network.

E-Commerce Operator(ECO): ECO is a person providing any information or any other services incidental to or in connection which supply of goods and services through electronic platform would be consider as operator. In legal term it is defined under Section 2(45) of the CGST Act, 2017, an e-commerce operator (ECO) is a person who directly or indirectly owns or manages an electronic facility, platform, or GST for e-commerce. E-COMMERCE TRANSACTION E-Commerce transaction of two models: (1) Supplier is supplying goods or services himself through E-Commerce where it is normal sale and purchase of goods or services and no party is involving and hence, here the seller and operator are oneand the same person. Example: The TITAN is selling watches through its own website. (2) Second one is involvement of third party where, the other seller and buyer which one is commonlyknown as Marketplace or aggregator model of E-Commerce, hence the role, is build the relation between buyer and seller and to link that they provide platform to various supplier. Example: The TITAN is selling watches to the customer through Filpkart or Amazon here in this case Filpkart will act as a E-Commerce operator which establish the link between customers and provide amarket places of Titan. So, for every E-Commerce transaction it involves three parties: 1. The Buyer 2. The Seller 3. The E-Commerce operator (ECO).

According to Section 5(5) of the IGST Act, 2017, the government has the power to specify certain categories of services for which the tax on inter-state supplies will be paid by the e-commerce operator ifthose services are supplied through it. The e-commerce operator will be liable to pay tax in the same way as a supplier who is responsible for paying tax in relation to the supply of services. However, if the e-commerce operator does not have a physical presence in the taxable territory, then any person representing the operator in that territory will be responsible for paying tax.

Alternatively, if the operator does not have a physical presence and no representative in the territory, they must appoint a person in the taxable territory for the purpose of paying tax. Under the IGST Act, 2017, the state in which the product is consumed will collect TCS and levy the tax. In the previous regime, the court held that the situs of a sale is irrelevant in determining whether a sale is inter- state or intra-state because the sale and purchase are conducted between the seller and purchaser, not the seller and ECO or the purchaser and ECO. Therefore, under IGST, the e-commerce operator onlyprovides services and the state where the product is consumed collects the TCS and levies the tax.

REGISTRATION UNDER GST ACT, 2017. Under Notification No. 12/2017 every E-Commerce Operator is compulsory to be registered under CGSTAct, 2017.5 E-COMMERCE OPERATORS REGISTRATION REQUIREMENT As per Section 24 of the CGST Act, 2017 all the e-commerce companies must obtain GST registrationmandatory.

THRESHOLD LIMIT FOR E-COMMERCE OPERATORS UNDER GST

Section 24(ix) read with Section 22(1) of the CGST Act, 2017 states: All E- commerce operators need to be registered but no threshold limit is being specified in the act. E-commerce sellers need not toregister if their total sales are less than Rs. 20,00,000/- .

Section 9 of the Central or State Goods and Services Tax Act enables the government to specify certaincategories of services for which electronic commerce operators are responsible for paying the tax on intra-state supplies through a notification on the recommendation of the Council. The electronic commerce operator is subject to all provisions of the Act as if they are the person responsible for paying the tax in relation to such services.

i. If an electronic commerce operator has no physical presence in thetaxable territory, any person representing the operator in that territory is liable to pay tax. If an electronic commerce operator has no physical presence or representative in the taxable territory, they must appoint . a person in the territory for the purpose of paying tax.

ii. Notification No. 17/2017 - Central Tax (Rate) specifies certain categories of services for which electroniccommerce operators are responsible for paying the tax on intra-state supplies, including transportation of passengers by a radio-taxi, motorcab, maxicab and motor cycle, providing accommodation in hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes, and housekeeping services. This notification came into effect from July 1, 2017, and provides an explanation of the terms "radio taxi," "maxicab," "motorcab," and"motor cycle.

E-COMMERCE SELLERS

Registration Requirement: Persons who sell goods or services through an e-commerce operator are e-commerce sellers. They may be selling goods or services through one or more e-commerce operators and may also sell throughtheir shops or office along with such platforms. Such sellers can be classified into three categories for the purpose of applicability of GSTprovisions.

i. Selling goods – Such sellers are required to get registered under GST even if their turnover is less than the threshold limit of Rs. 40/20/10 lakh. It means they are required to register before selling through the e-commerce platform. All platforms like Amazon, Flipkart etc. required GSTIN at time of registration asa seller on their platform.

ii. Selling services other than mentioned in Section 9(5) – Such sellers are required to register and collect GST only if their turnover is more than the threshold limit of 20 or10 lakh. And if they are notregistered then GST is not liable on such transaction done through e- commerce operator. Under theNotification no. 65/2017 – CGST Act 2017.

iii. Selling services mentioned in Section 9(5) – Such sellers are not liable to register underGST even iftheir turnover is more than the threshold limit. COLLECTION, PROCDURE AND PENALTY Tax collected by the ECO when a supplier supplies some goods through its website and the payment for that supply is collected by e-commerce operator for all the supplied goods. Under GST Act, 2017 the ECO is liable to collect tax at source on supply of goods for providing services and also liable to pay taxwith in a prescribed period of time. There are two types of tax defaults at source: E-commerce operators must collect tax at source and pay it within the prescribed period, while E-commerce Aggregators are responsible for depositing and deducting tax at a rate not exceeding 1% of each transaction on supplied goods.

i. Tax Deducted at Source (TDS): TDS in GST is collected by depositing with the government. Under Section 51 of the CGST Act, 2017, TDS must be deducted at a rate of 2% (1% CGST + 1% SGST) before making payments to suppliers if the transaction value exceeds ₹ 2,50,000. This applies to various categories such as departments of the central government or stategovernment, local authorities, and governmental agencies. ii. Tax Collected at Source (TCS): TCS is the responsibility of the E-commerce operator. According to Section 52(1) of the CGST Act of 2017, the ECO must collect tax at a maximum of 1% of the net value of taxable goods or services from the supplier making supplies through the operator’s online platform. The rate of tax is0.5% (CGST) + 0.5% of (SGST) = 1%. For ECOs operating through their own website and dealing in their own products, they need to registerGST for e-commerce under the category of the taxpayer (normal). However, if an ECO gets suppliesfrom suppliers to sell on their own online platforms, they need to apply under the category of the tax collector (e-commerce).

For example, Oppo sells products through Amazon, Flipkart, snap deal, etc. Explanation – “the Net value of taxable supplies” means the aggregate value of taxable supplies of goods or services or both other than services mentioned under Sec.9(5) of CGST ACT, 2017. llustration: if 'A' approaches Flipkart and receives a sum of Rs. 2000/- and sells to 'B', Flipkart is liable topay tax to the government of 1% as the rate of tax after deducting the tax from the payment made to 'A'.

PENALTY Section 52(14): Section 52(14) mandates that any person who fails to furnish the information required by the notice served under section 52(12) shall, without prejudice to any action that may be taken under section 122, be liable to a penalty which may extend to Rs.25,000/-An explanation to section 52 says that the expression 'concerned supplier shall mean the supplier of goods or services or both making supplies through the operator. On utilisation of input tax credit availed under this Act for payment of tax dues under the Integrated Goods and Services Tax Act in accordance with the provisions of sub-section(5) of section 49, as reflected in the valid return furnished under sub-section (1) of section 39. The amount collected as central tax shall stand reduced by an amount equal to suchcredit so utilised and the Central Government shall transfer an amount equal to the amount so reduced from the central tax account to the integrated tax account in such manner and within such time as maybe prescribed.

CONCLUSION

In conclusion, e-commerce transactions have become increasingly common and important in today's economy. As per the GST laws, these transactions are subject to certain provisions, including the TCS provisions, which require e-commerce operators to collect tax at a prescribed rate from suppliers of goods or services. These transactions can be complex due to the involvement of multiple parties and the simultaneous occurrence of various transactions. It's crucial for businesses operating in the e-commerce space to be aware of their GST obligations and seek specialized advice to ensure compliance with the applicable laws and regulations. Overall, GST has played a significant role in regulating e-commerce transactions in India and has contributed to creating a more transparent and efficient tax system for businesses and consumers alike.