Special procedures for e-commerce operators effective from 1st Oct 2023

 The CBIC has notified the procedure to be followed by the E-Commerce Operator in two scenarios. The role of an E-Commerce Operator is well pronounced in Section 52 of the CGST Act, 2013 where, the operator is required to collect tax. Section 2(45) of the CGST Act, 2017 defines that “electronic commerce operator means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce” and “electronic commerce means the supply of goods or services or both, including digital products over digital or electronic network”.

Section 52(1) of the CGST Act, 2017 boldly pronounces that “Notwithstanding anything to the contrary contained in this Act, every electronic commerce operator (hereafter in this section referred to as the “operator”), not being an agent, shall collect an amount calculated at such rate not exceeding one per cent., as may be notified by the Government on the recommendations of the Council, 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.”

The question raises that of taxable supply is made through E-Commerce Operator, the above shall be applicable. But what should be done in case of exempt supplies made through E-Commerce Operator had no clarity. CBIC in NOTIFICATION No. 37/2023 – Central Tax dated 04th August 2023 has issued the procedure to be followed by the E-Commerce Operator when the supply is exempted from the levy. 

The Notification clarifies that, in case the supplier qualifies for exemption from registration U/s 23 of the CGST Act, 2017, 

1. The electronic commerce operator shall allow the supply of goods through it by the said person only if enrolment number has been allotted on the common portal to the said person (the exempted supplier).

2. The electronic commerce operator shall not allow any inter-State supply of goods through it by the said person;

3. The electronic commerce operator shall not collect tax at source under sub-section (1) of section 52 in respect of supply of goods made through it by the said person; and

4. The electronic commerce operator shall furnish the details of supplies of goods made through it by the said person in the statement in FORM GSTR-8 electronically on the common portal.

Where multiple electronic commerce operators are involved in a single supply of goods through electronic commerce operator platform, “the electronic commerce operator” shall mean the electronic commerce operator who finally releases the payment to the said person for the said supply made by the said person through him.

This notification shall come into force with effect from the 1st day of October, 2023.

Implication of the Notification:

The Notification provides that, unless an enrolment number is allotted the said supplier qualified under Section 23 of the CGST Act, 2017 shall not further enjoy the same benefits.  Also, the burden ensuring that the person doesn’t undertake Inter-State supply is left with the Operator. The details are to be provided in the below format in Table 3.1 of Form GSTR 8 and any amendments thereof is carried over in Table 4.1 of the said form

A question further arises where the supplier is registered but is registered as a Composition Supplier. How to treat the transactions made to them??

NOTIFICATION No. 36/2023- Central Tax dated 04th August 2023 clarifies on the same that if the supplier is registered U/s 10 of the CGST Act, 2017 then,

1. The electronic commerce operator shall not allow any inter-State supply of goods through it by the said person

2. The electronic commerce operator shall collect tax at source under sub-section (1) of section 52 of the said Act in respect of supply of goods made through it by the said person and pay to the Government as per provisions of subsection (3) of section 52 of the said Act; and

3. The electronic commerce operator shall furnish the details of supplies of goods made through it by the said person in the statement in FORM GSTR-8 electronically on the common portal.

This notification shall come into force with effect from the 1st day of October, 2023.

Please note this exception is relevant only for suppliers of goods( not services) registered under sec 10 as per sec 137 of Finance Act 2023. 

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KN Akshaya MA LLB