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Section 9 (5) of the CGST Act is a special case focusing on e-commerce operators. For service-oriented businesses operating through an e-commerce operator, such as restaurant services, including cloud kitchens, housekeeping and accommodation services, and motor cabs, the liability of tax falls on the e-commerce operator.
The Act’s provisions will apply in such a manner that the e-commerce operator, as if he is the supplier liable to pay tax on the application of those services.
|Basis||Section 52||Section 9(5)|
|Collection of TCS/|
|TCS to be collected by the e-commerce operator on the net value of taxable supplies made by other suppliers through it.||Liability of tax falls on the e-commerce operator and he is treated as if he is the supplier of those services.|
|Registration||Compulsory registration for both the e-commerce operator as well as the actual supplier||Voluntary registration can be availed by the actual supplier. e-Commerce operator must mandatorily obtain registration.|
|Threshold Exemption||Not applicable.||Applicable in the case of the actual supplier.|
|Compliance||Form GSTR-8 has to be filed every month (TCS collected as well as details regarding the supplies). Form 2A of each supplier will reflect the details entered in GSTR-8 by the e-commerce operator.||Form GSTR-3B needs to be filed in this case, specifically Table 3.1.1.|
|Reverse Charge Mechanism||Not Applicable||Applicable|
This section focuses on certain categories of services for which the tax is levied and paid by the e-commerce operator if the services were rendered through them. This includes-
Irrespective of whether the supplier is registered under GST, the e-commerce operators will be liable to pay tax as if it were the supplier per the reverse charge mechanism. The supplies under this section will be mainly intra-state supplies.
Earlier, for restaurants and cloud kitchens providing services through e-commerce operators such as Zomato, Swiggy, etc., the restaurant was liable to pay the GST on its services.
However, w.e.f. On January 1st, 2022, the e-commerce operators (Zomato and Swiggy) are liable to pay tax under the reverse charge mechanism. It has to be paid via the electronic cash ledger at a rate of 5% whether or not the restaurant (actual supplier) is registered under GST or not. Moreover, there can be no claim for Input Tax Credit in this case.
The invoice for any of the services notified under Sec 9 (5) will be issued by the e-commerce operator themselves.
Suppose, under one order, the e-commerce operator provides a combination of services under notified services [Sec 9 (5)]. In that case, a separate bill should be raised by the e-commerce operator for the component under notified services.
Suppose the e-commerce operator has no physical presence in the taxable territory. In that case, the tax liability will fall on anyone representing the e-commerce operator for any purpose in that territory.
However, suppose the e-commerce operator does not have a physical presence nor a representative in the taxable territory. In that case, the e-commerce operator will appoint the person liable to pay the tax.
Irrespective of the turnover earned during the financial year by e-commerce operators, they have to obtain a registration under GST as per the CGST rules. However, the actual supplier of those services under this section is entitled to a threshold exemption. This means they are not required to register even if their turnover exceeds the threshold limit.
Where services, including housekeeping, accommodation, restaurant and passenger transport services, are supplied through an e-commerce operator, the GST liability is to be borne by the e-commerce operator.
GSTR-3B has a new table (Table 3.1.1) being introduced where all supplies made under Section 9(5) are to be reported by the supplier and the e-commerce operator. This table will go live on 1st August 2022.
For the e-commerce operator
The supplies that attract Section 9 (5) shall be reported in Table 3.1.1 (i). The payment of tax has to be made by the e-commerce operator in cash. Payment via ITC is not permitted. Additionally, these supplies should not be included in Table 3.1. (a) of the GSTR-3B.
For the supplier of services (registered person)
The supplies that attract Section 9 (5) shall be reported in Table 3.1.1 (ii) by the supplier of services. Additionally, these supplies should not be included in Table 3.1. (a) of the GSTR-3B. Since the e-commerce operator bears the tax liability, the supplier need not make any payment for taxes.