India is a sovereign country with many powers for states. Unlike many other countries, GST in India is implemented as duel tax system. Means, two types of GSTs are implemented in India. As you know, there are IGST, CGST and SGST. Each taxable transaction of goods and services in India attracts duel GST – CGST and IGST or SGST. So the main reason for duel GST is to account the share of state governments. Ie, SGST (State Goods and Service Tax) and the share of IGST (Integrated Goods and Service Tax).
So, an account of GST Tax payers is to be accounted separately. At present government insists separate GST registration in each state, if a person operates his business. For example, if XYZ company has business transaction of goods or services in Maharashtra, West Bengal and Tamil Nadu, he has to take registration of GST in all the three states. Means a separate GST registration number has to be obtained in each state, although the Permanent Account Number, PAN is same.
As per sub section 1 of section 19 of GST Law explains that every person who is liable to take a Registration will have to get registered separately for each of the States where he has a business operation and is liable to pay GST
Collection of GST under e-Commerce Trade
How to define e-commerce under Goods and Service Tax Law?
As per GST Law, ‘electronic commerce’ shall mean the supply or receipt of goods and / or services, or transmitting of funds or data, over an electronic network, primarily the internet, by using any of the applications that rely on the internet, like but not limited to e-mail, instant messaging, shopping carts, Web services, Universal Description, Discovery and Integration (UDDI), File Transfer Protocol (FTP), and Electronic Data Interchange (EDI), whether or not the payment is conducted online and whether or not the ultimate delivery of the goods and/or services is done by the operator.
Who is an E-Commerce Operator in terms of GST Law?
As per Goods and Service Tax Law, an E Commerce Operator 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.
What is the procedure to collect GST from e-Commerce operator? When is GST charged by an e-commerce operator? How does GST collection work under e-Commerce business?
As per GST Law, notwithstanding anything to the contrary contained in the Act or in any contract, arrangement or memorandum of understanding, every electronic commerce operator (hereinafter referred to in this section as the “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 power to collect the amount specified in sub-section (1) shall be without prejudice to any other mode of recovery from the operator.
When to pay GST collected by e-Commerce operator to government?
As per GST Law, the amount collected under sub-section (1) shall be paid to the credit of the appropriate Government by the operator within ten days after the end of the month in which such collection is made, in the manner prescribed.
Is an e-Commerce Operator required to submit e-statement of GST collection towards outward supplies of goods and services? When to submit such accounts of GST collected?
Under GST Law, every operator shall, furnish a statement, electronically, of all amounts collected under sub-section (1), towards outward supplies of goods and/or services effected through it, during a calendar month, in such form and manner as may be prescribed, within ten days after the end of such calendar month. (b) The statement under clause (a) shall contain, inter alia, 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.
Can Supplier of goods or services claim credit of GST paid? How does the supplier of goods or services gets credit of GST paid at end user level of e-Commerce? How does this mechanism of GST tax credit work?
Any amount collected in accordance with the provisions of this section 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 filed under sub-section (4), in the manner prescribed.
How does the mechanism of GST accounting work between supplier and end user under e-Commerce trade?
The details of supplies and the amount collected under sub-section (1) during a calendar month, and furnished by every operator under sub-section (4), shall, in the manner and within the period prescribed, 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. In short, the supply details from supplier and receipts details at end user file GST tax returns. Here, it works like double entry system of book keeping.
What is the benefit of verifying from both sides like double entry book keeping system?
The benefit of verifying at both sides provides maximum accuracy on quantity and value of supply of goods and services. If the details of outward supply, on which the tax has been collected, as declared by the operator under sub-section (4) do not match with the corresponding details declared by the supplier under section 25, the discrepancy shall be communicated to both persons in the manner and within the time as may be prescribed.
How to treat the discrepancy in value of supply on any payment of GST?
The value of a supply relating to any payment in respect of which any discrepancy is communicated under sub-section (7) 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, in the manner as may be prescribed, for the calendar month succeeding the calendar month in which the discrepancy is communicated.
The concerned supplier shall, in whose output tax liability any amount has been added under sub-section (8), be liable to pay the tax payable in respect of such supply along with interest, at the rate specified under sub-section (1) of section 36 on the amount so added from the date such tax was due till the date of its payment.
The GST Law further states about supply of goods or services and stock of goods as “ Any authority not below the rank of Joint Commissioner may, by notice, either before or during the course of any proceeding under this Act, require the operator to furnish such details relating to— (a) supplies of goods and/or services effected through such operator during any period, or (b) stock of goods held by the suppliers making supplies through such operator in the godowns or warehouses, by whatever name called, managed by such operators and declared as additional places of business by such suppliers – as may be specified in the notice.”
Notice to e-Commerce GST payer under GST Law.
As per GST Law for business of e-Commerce, every operator on whom a notice has been served under sub-section (10) shall furnish the required information within five working days of the date of service of such notice.
Penalty for e-Commerce GST payers against default of producing information
As per GST Law, any person who fails to furnish the information required by the notice served under sub-section (10) shall, without prejudice to any action that is or may be taken under section 66, be liable to a penalty which may extend to rupees twenty-five thousand. Explanation— For the purposes of this section, the expression ‘concerned supplier’ shall mean the supplier of goods and/or services making supplies through the operator.