Electronic Commerce and GST Model Laws

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2 Electronic Commerce and GST Model Laws QWERTYUIOP{} QWERTYUIOP{ {}QWERTYUIOP{WETYUIOP{QWERTYUIOP 1. INTRODUCTION The dynamism of E-Commerce makes very difficult to provide any standard definition for E Commerce, it can usefully be defined as the use of computer networks to facilitate transactions involving the production, distribution, and sale and delivery of goods and services in the marketplace. India currently does not have specific tax law provisions in place to regulate the e-commerce industry. As a result, we have seen a lot disputes in past two-three years, mainly in Karnataka and Kerala. The Empowered Committee-of-State-Finance-Ministers constituted to create consensus among states on GST Laws, have understood these glitches therefore and have dedicated a separate chapter under Model GST Law, for addressing the issues pertaining to E-Commerce business. 2. OUTLINES OF GOODS AND SERVICES TAX (GST) 2.1 Goods and Services Tax (GST), as proposed, is a multi-stage dual tax on domestic consumption. GST is charged on all taxable suppliess of goods and services in India except those specifically exempted. GST is also charged on importation of goods and services into India. 2.2 The dual GST is expected to expand the tax bases and simplify and harmonise the conception tax systems, the supply of goods and services shall be liable to pay both Centre and State duties; 2.3 Payment of tax is made in stages by the intermediaries in the production and distribution process. Although the tax would be paid throughout the production and distribution chain, it is ultimately passed on to the final consumer. Therefore, the tax itself is not a cost to the intermediaries and does not appear as an expense item in their financial statements.

3 2.4 The State of Origin shall not be entitled to levy taxes on the goods and services in the course of interstate trade and commerce. The State where goods and services consumed will be entitled to receive such taxes; 2.5 The goods and services shall be liable to pay IGST i.e., Integrated Goods and Service Tax which is sum total of State and Center duties (SGST+IGST).The Centre Government would collect the IGST in the course of Inter-state state would charge IGST on inter-state supplies and supplies; 2.6 The supplier in the exporting use the input CGST on payment of IGST, the supply receiver shall make use of that IGST for the payment of CGST at the point of destination. The seller may use the input of SGST for the payment of IGST on the Inter-state supply in the origin state and the buyer shall make use of IGST for the payment of output SGST on transaction in the destination state; 2.7 The utilisation of SGST for the payment of IGST at the origin point and IGST for payment of SGST at the destination point with effective and appropriate control would result in almost no gain or/and no loss to the State or to the centre as both would mostly cancel each other over a period of time and over a number of transactions. 2.8 Every registered supplier and receiver require to furnish Retunes GSTR-1, GSTR-2 and GSTR-3 etc, thesee returns will contain the details of input of SGST used for payment of output IGST, input IGST used for the payment of output GST and the quantum of difference between them. This difference will decide who has to compensate whom or to cancel each other over a period of time and over a number of transactions. 2.9 The Central Government would pay, to the importing State, the input IGST used for the payment of the SGST in the importing State on subsequent supplies in that State. The buyer in the importing state can claim the Input Tax Credit of the IGST paid while discharging his tax liability in his State while filing return on the basis of the invoices. In the IGST model, an uninterrupted input tax credit on the

4 Inter-State supply could be maintained. Further no refund claim will be required in the exporting as the Input T Credit used up while paying the tax. The order of set-off the output liabilities of IGST, first the IGST input will be utilized, and after that CGST input and then SGST input will be utilised The IGST will be administered by the authorities administering CGST. The account settlement could be assigned to any nodal agency. 3. BUSINESS OUTLOOK 3.1 E-Commerce Electronic commerce, commonly written as e-commerce or ecommerce, is the trading or facilitation of trading in products or services using computer networks, such as the Internet or online social networks. Electronic commerce draws on technologies such as mobile commerce, electronic funds transfer, supply chain management, Internet marketing, online transaction processing, electronic data interchange (EDI), inventory management systems, and automated data collection systems. Modern electronic commerce typically uses the World Wide Web for at least one part of the transaction's life cycle although it may also use other technologies such as . E-commerce businesses may employ some or all of the following: Online shopping web sites for retail sales direct to consumerss Providing or participating in online marketplaces, which process third-party business-to-consumer or consumer-to-consumer sales Business-to-business buying and selling Gathering and using demographic data through web contacts and social media Business-to-business electronic data interchange Marketing to prospective and established customers by or fax (for example, with newsletters) Engaging in retail for launching new products and services Online financial exchanges for currency exchanges or trading purposes Source :Wikipedia

5 3.2 Business Models E-commerce business acts under multiple business arrangements, popularly known as business Model. If we observe minutely the business model of one e-commerce business is different from another e-commerce. Broadly there are three major kinds of e-commerce business models prevalent in India: a. Business that has a presence in the physical world and withoutt a commercial Internet presence. Virtually many established business now has a website but uses its site for passive promotional purposes rather than to engage in online commercial activity. b. Business that combines a physical offline presence with one online. This model of business engages in commercial activity through its physical stores and also from its website. c. Business that operates exclusively online. This model of business is also known as dot-com company. 3.3 Different e-commercee market categories a. Business-to-consumer companies (B2C) are involved with individual consumers in a retail or service setting. b. Business-to-businesss companies (B2B) provide goods or services to other businesses. Although B2B has less public prominence than B2C, most analysts agree that the B2BB sector garners a much higher volume of business than does B2C. c. Consumer-to-consumer companies (C2C) facilitate transactions between individual consumers. d. Government-to-business (G2B) and e. Government-to-consumer/citizen (G2C).

6 4. Impact of GST on e-commerce GST is neutral towards business, GST is not incident on a business but on Supply of Goods and Services, wherein the GST paid on input is available for set-off from the GST s incident on output supply. The incident of GST on Supply, irrespective to the nature of business and business model. The Model GST Laws provides a separate chapter for e-commerce for the purpose of admisntration and collection of GST to bring tax efficiency under GST framework. The GST have impacts in the following aspects of E-Commerce. a) Persons required to collect and pay GST b) General compliances pertaining to GST which are applicable to all person who are engaged in the business c) Additional compliances to be made by the persons who are engage in e- commerce business; d) General and specificc rules of supply applicable to e-commercee business i. Place o f Supply; ii. Time of supply iii. Value of supply iv. Reverse charge mechanism 5. ANALYSIS OF GST MODEL LAWS Though there is a separate chapter (chapter XIB) is provided to deal with e- commerce but there are several other provisions applicable to e-commerce business are scattered though out the act.

7 GOODS (48) goods means every kind of movable property other than actionable claim and money but includes securities, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under the contract of supply; Explanation For the purpose of this clause, the term moveable property shall not include any intangible property. SERVICES (88) services means anything other than goods; Explanation: Services include intangible property and actionable claim but does not include money. 5.1 Application of Place of Supply in e-commerce transitions 5.1A Place of Supply of goods: Sec. Circumstances No. (2) Supply involves movement of goods by supplier/recipient/e-commerce operator (2A) i. Supplier acting on direction of e- commerce operator ii. Delivered goods to recipient iii. Before/during movement of goods iv. Either by transfer of documents of title or otherwise v. Th`en shall be deemed third person has received the goods Place of Supply of Goods Location of delivery This is a general practice where e-com. operators build order like amazon or flipkart are working Principal place of business of e-commerce operator This situation may arise in B2B transactions

8 vi. Eg Bill to ship to supply in transit sales (3) Supply does not involve movement of goods Location of goods at time of delivery to recipient This situation may arise in B2B transactions (4) Goods assembled/installed at site Place of such installation/assembly This situation may arise in B2B transactions (5) Supplied on board a conveyance Location at which such goods are taken on board This situation may arise in B2B transactions (6) Place cannot be determined as above Determined by law made by parliament w.r.t. recommendation of board 5.1B Place of Supply of Services Sec. No. Services 2 Supplied to registered person 3 Supplied to person other than registered person 4 Service in relation to immovable property (architects/interior decorators etc), lodging, accommodation, rent for functions and ancillary services 5 Restaurant, catering, personal grooming, cosmetic & Plastic surgery Place of Supply of Services Location of such person This may arise on B2B transactions Location of recipient as per records otherwise, location of supplier This situation may arise in B2C transactions; This rule also applicable to downloadable products Location of such immovable property If an e-commercee operator build order on line and provide service in relation to immovable properties, the place of supply of service shall be the place where the service will be performed. Location where services actually performed Services provided by Food Panda, Geetanjali, shall fall under this category. 6 Service in relation to training & performance Location of registered person receiving the

9 appraisal 7 Admission to events/amusement parks & ancillary services services If person not registered place where services performed this will include online training by way of video conferencing. Location where event is held or park is situated It is immaterial the location from where the booking were made or office of operatory situated 8 Organisation of events & ancillary services & assigning of sponsorshipp Location of registered person receiving the services If person not registered place where event actually held Webcasting and Satellite classes 10 Transportation of passengers Location of registered person receiving the services (booking Ola/Uber or inter-state transportations facilities etc. for the purpose of getting credit) If person not registered place where passenger embarks on conveyance for a continuous journey. Example1 A mobile phone booked on Amazon site on New Delhi, and the supply delivered by e- commence operator which is situated at Bangalore, and delivered to Kanpur, what shall be the place of supply? The place of supply shall be place of delivery ie, Kanpur. Example 2

10 A TV Set booked from Kanpur on portal of Amazon which is situated at Bangalore, the Television were delivered from a Amazon managed depot situated at Gurgaon to Delhi, the address of delivery. i. Depot, Gurgaon acting on direction of e-commerce operator Amazon; ii. Delivered goods to recipient at Delhi iii. Supply by transfer of documents of title as well as physically The place of supply shall be Delhi though ordered was placed from Kanpur, the place of supply was Delhi. Example 3 A TV Set booked from Kanpur on portal of Amazon which is situated at Bangalore, the Television were delivered from a Macromax (Supplier) managed depot situated at Gurgaon to Delhi, the addresss of delivery. We will test this question from lenses of Section 2A whether the following condition are complied with? i. Macromax (Supplier) acting on direction of e-commerce operator: Yes ii. Delivered goods to recipient: Yes iii. Before/during movement of goods: No iv. Either by transfer of documents of title or otherwise : Yes Thus the test under Section 2A is not complied with, hence it shall not deemed to a supply from Macromax to Amazon but it is a Supply from Maxcromax to Purchaser and place of delivery will be the place where the goods will actually delivered. 5.2 Time of Supply Time of Supply a Legal fiction In absence of a concrete regulations, It would be is very difficult to determine the actual time of supply particularly in e-commerce era due to its dynamic nature coupled with wide definition of Supply.

11 Under GST framework the Time of Supply is very important from taxation point of view, in one hand Government wants to tax future income in present wherein taxpayers want to pay tax only after the collection of tax from its customers. Thus Model GST Law has created a legal fiction under Section 12 and Section 13 to determine the time of supply, which is based on international practice and guidelines provided by OECD. 5.2A Time of Supply of Goods Thus the provisions of Section 12 Time of supply of goods is a set of different provisions to deal with different situations of supply of goods. The different situations are: 1. where the goods are delivered to recipient; 2. where the nature of goods are as such it could not delivered to recipient; 3. Where goods is delivered to agent or principal; 4. where the goods are delivered continuously and successive statements of accounts or successivee payments are involved; 5. Where the goods being sent or taken on approval or sale or return or similar terms; 6. Supply of Goods by any way which is not falling under the above. The time of supply shall be the earliest date of the following: (a) the date on which the goods are removed by the supplier for supply to the recipient (b) the date on which the supplier issues the invoice with respect to the supply; or (c) the date on which the supplier receives the payment with respect to the supply; or (d) the date on which the recipient shows the receipt of the goods in his books of account.

12 Example 4: The order received by Operator on 15/5/2017 and operator passed the order it the brand owner on 16/05/2017 or the goods removed from depot on 17/05/2017 and delivered it to recipient on 20/ /05/2017 alongwith invoice dated 16/05/2017. Case 1. Payment made by electronic transfer on 15/05/2017 at the time of order. Case 2. Payment on the basiss of cash on delivery 20/05/2017. Case 1. Date of payment 15/05/2017 Case 2. Date of Invoice 16/06/ B Time of Supply of Services The determination of time of supply in respect to a service is not possible, as the service cannot be perceived by eye, thus only admission by way of documents and action of taxpayers provide the department to determine the time of supply. The Supply of Services are very dominant in E-commerce business, it include downloading of music, nnmovies, software, education products, safelight classes, financial products like insurances, wallets etc. The provision of Section 13 clearly specifies the liability to pay GST only arises at the time of Supply as per the provision of Section 13 and the time of service will strictly determine as per the provision of Section 13 and not by any other mechanism.

13 Provisions under Model GST Laws:WERTYUIOPWETYUIOWETYUIOASDFGHWEIERTYU Section 13: Time of supply of Services (1) The liability to pay CGST/SGST on services shall arise at the time of supply, as determined in terms of the provisions of this section. (2) The time of supply of services shall be:- (a) the date of issue of invoice or the date of receipt of payment, whichever is earlier, if the invoice is issued within the prescribed period; or (b) the date of completion of the provision of service or the date of receipt of payment, whichever is earlier, if the invoice is not issued within the prescribed period; or (c) the date on which the trecipient shows the receipt of services in his books of account, in a case where the provisions of clause (a) or (b) do not apply. Explanation 1.- For theii purposes of clauses (a) and (b), the supply shall be deemed to have been made to the extent it is covered by the invoice or, as the case may be, the payment. Explanation 2.- For the purpose of clause (a) and (b) of sub-section (2), the date of receipt of payment shall be the date on which the payment is entered in the books of accounts of the supplier or the date on which the payment is credited to his bank account, whichever is earlier. (3) In case of continuous supply of services, the time of supply shall be - (a) where the due date of payment is ascertainable from the contract, the date on which the payment is liable to be made by the recipient of service, whether or not any invoice has been issued or any payment has been received by the supplier of service;

14 (b) where the due date of payment is not ascertainable from the contract, each such time when the supplier of service receives the payment, or issues an invoice, whichever is earlier; (c) where the payment is linked to the completion of an event, the time of completion of that event; (4) For the purposes of sub section (3) above, the Central or a State Government may on the recommendation of the Council, specify, by notification, the supply of services that shall be treated as continuous supply of services; (5) In case of supplies in respect of which tax is paid or liable to be paid on reverse charge basis, the time of isupply shall be the earliest of the following dates, namely- (a) the date of receipt of iservices, or (b) the date on which the payment is made, or (c) the date of receipt of invoice, or (d) the date of debit in the bookso of accounts. Explanation.- For the purpose of clause (b) of sub-section (5), the date on which the payment is made shall be the date on which the payment is entered in the books of accounts of the recipient or the date on which the payment is debited in his bank account, whichever is earlier. (6) In a case where the supply of services ceases under a contract before the completion of the supply, such services shall be deemed to have been provided at the time when the supply ceases.

15 (7) Where it is not possible to determine the time of supply of services in the manner specified in sub-sections (2), (3), (5) and (6), the time of supply shall (a) in a case where a periodical return has to be filed, be the date on which such return is to be filed; or (b) in any other case, be the date on which the CGST/SGST is paid. 6 ANALYSIS OF LEGAL PROVISION UNDER GST MODEL LAW THEIR APPLICATION IN E- COMMENCE 6.1 Where the Invoice issued (within prescribed time): Time of Supply will be the earliest date of the following: Date of issue of invoice or Date of receipt of payment Example 2: The order received by Operator for anti-virus package on 15/5/2017 and operator passed the order it the brand owner on 16/05/2017 or the downloadable link of the software, the product were sent immediately on 16/05/2017, the anti-virus actually downloaded on 20/06/2017. Case 1. The payment made electronically, at the time of 15/05/2017 and the invoice generated immediately after payment. Case 2. The payment made electronically at the time of download on 20/06/2017 and the invoice generated immediately after payment. The time of Supply The model GST law made clear and ends all controversy whether a software is goods or services, it explained anything which is intangible is service.

16 Case 1. Date of payment i.e., 15/05/2017 Case 2. Date of download 20/06/2017, [though link were mailed on 16/05/2017 but the software supply done after downloading date i.e., 20/06/2017]. 6.2 Where the invoice not issued within prescribed time: Time of Supply will be the earliest date of the following: the date of completion of the provision of service or the date of receipt of payment The term provisions of service, came from the prior practice, it should be the date of Supply of Service instead. Hope that final draft will rectify this error. 6.3 Where the invoice is not issued: The date on which the recipient shows the receipt of services in his books of account. How a taxpayer will bcomply for the entries in the books of account of recipient, is a big questing we need to wait for final draft of the GST Act. 6.4 Under Reverse Charge Mechanism The time of supply shall be the iiearliest of the following dates, namely- the date of receipt of services, or the date on which the payment is made, or the date of receipt of invoice, or the date of debit in the books of accounts. The applicability of reverse charge mechanism will be declared by notification by Central Government and State Government on recommendation of GST Council.

17 The possibilities of situationss mentioned in point no. 2, 3 and 4 are remote in e- commerce business. 6.5 In case of continuous supply of services, Common continuous supplies of services are in e-commerce business are On-line education/ /training programs, Satellite classes or subscription of online video programmers will fall under this category of supply. The time of supply shall be - where the due date of payment is ascertainable from the contract: the date on which the payment is liable to be made by the recipient, whether or not any invoice has been issued or any payment has been received by the supplier of service; where the due date of payment is not ascertainable from the contract: the time of Supply of Service shall be each such time when the supplier of service receives the payment, or issues an invoice, whichever is earlier; where the payment is llinked to the completion of an event: the time of completion of that event; Example 3 Krishna, motivational trainerr entered into a contract with Infosystem Limited for providing 15 hour online sessions to their employee, the contract entered on 1 st April, 2017, for which he will be getting Rs. One Lakh per month. a. If the contract provides that every 7 th of the month Krishna will get the monthly compensation : the time of Supply will be 7 th of every month. b. If there is no provision in contract with regard to the date of payment, the time of supply will be the date on which Krishna will receive the compensation or date of

18 invoice issued by it or the date on which 15 hour of program is over, whichever is earlier, shall be time of Supply of the Service. 6.6 In a case where the supply of services Ceases under a contract before the completion of the supply, such services shall be deemed to have been provided at the time when the supply ceases Residual Supply of Services, where it is not possible to determine the time of supply of services in the manner the time of supply shall in a case where a periodical return has to be filed, be the date return is to be filed; or in any other case, be the date on which the CGST/SGST is paid. on which such Dates of entries on the following documents, which are important for evidencing for Supply of Time 1. Invoice; 2. Books and accounts; 3. Banks statement; 4. Receipt of goods or gate pass; 5. Receipt of possession of good; 6. Returns; 7. Agreement for continuous supply.

19 8. SPECIFIC COMPLIANCES PROVISIONS The Model GST Laws provides a separate chapter for e-commerce for the purpose of admisntration and collection of GST to bring tax efficiency under GST framework, this chapter impose the burden of compliances and identification of chain of supply. CHAPTER XIB ELECTRONIC COMMERCE 43B. Definitions In this Chapter, unless the context otherwise requires, - (a) aggregator means a person, who owns and manages an electronic platform, and by means of the application and a communication device, enables a potential customer to connect with the persons providing service of a particular kind under the brand name or trade name of the said aggregator; (b) brand name or trade name means, a brand name or a trade name, whether registered or not, that is iiito say, a name or a mark, such as an invented word or writing, or a symbol, monogram, logo, label, signature, which is used for the purpose of indicating, or so as to indicatef a connection, in the course of trade, between a service and some other person using the name or mark with or without any indication of the identity of that person; (c) branded Services means services which are supplied by an electronic commerce operator under its own brand name or trade name, whether registered or not; (d) 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 , instant messaging, shopping carts, Web services, Universal Description, Discovery and Integration (UDDI), File Transfer Protocol (FTP), and Electronic Data Interchange (EDI),

20 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; (e) electronic 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. 43C. Collection of tax at source (1) 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. (2) The power to collect the amount specified in sub-section (1) shall be without prejudice to anyii other mode of recovery from the operator. (3) 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. (4)(a) 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

21 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. (5) 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. (6) The details of suppliess 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 iifurnished by the concerned supplier in his valid return for the same calendar month or any preceding calendar month. (7) Where 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. (8) The value of a supply relating to any payment in respect of whichh 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. (9) 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

22 amount so added from the date such tax was due till the date of its payment. (10) 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 h 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. (11) 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. (12) 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.

23 Thus the provisions of the Chapter XIB casted the onus on the Electronic Commerce Operator: 1. To Collect tax 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 2. Deposit the collected amount within ten days after the end of the month in which such collection is made 3. Furnish Statement furnish a statement, electronically, of all amounts collected under sub-section (1), towards outward supplies of goods and/or services effected throughh it, during a calendar month 4. Comply with notice of deficiency The operator will require to make rectification in its next valid return or the deficiency will be added to taxpayer s liabilities. Every electronic commerce operator shall require to deduct/collect an amount, out of the amount payable or paid to the supplier At the earliest time of the following: a. credit of any amount to the account of the supplier of goods and/ /or services or b. payment of any amount in cash or by any other mode At such rate as may be notified in this behalf by the Central/State Government on the recommendation of the Council. TDS made under this provision of this Section is not reverse charge mechanism.

24 The compliance burden on supplier is minimum; they have to file their regular returns and entitled to get the tax collected amount adjusted, however they will require reconciling their liabilities with electronic ledger of concerned e-commerce operators. 9. MISCELLANEOUS a. Persons required collecting GST Only a GST-registered supplier can charge and collect GSTs (SGST & CGST/IGST) on all outward supplies of good or service made in India apart from exempt or zero-rated supplies. A person is a taxable person for GST purposes if he is or is liable to be registered under the Goods and Services Laws. Under Section 43C of Modelll GST Law, Electronic Commerce Operator shall, collect an amount, out of the amount payable or paid to the supplier, calculated at such rate as may be notified innn this behalf by the Central/State Government on the recommendation of the Council. Thus the Section 43C provides collection only of Tax deducted at source, the rate collection shall bed prescribed by the Central/State Government on the recommendation of the Council. Thus the applicable GSTs on supply shall be collected by Supplier only, the liabilities of E-commerce operator shall only to collect TCS on the particular supply. b. Supply of physical goods via the internet subject to GST If TATA sells Buses via the internet and the Buses are physically supplied to a customer in Punjab the movement starts from TATA Nagar, Jharkhand, the supply is subject to IGST. TATA is not falls under the definition of e-commerce operator, therefore it has not require to collect and deposit any TCS. c. Goods/Services imported from a foreign supplier through internet.

25 A photo camera imported to produce a movie by way of booking on Amazon, UK. The Camera shall be chargeablee with Basic Custom Duty for the time being in force and with IGST (CVD will be replaced with IGST), as below: V = (1 +Tbcd)(1+Tigst) V = Value of Import Go oods Tbcd = Rate of BCD Tigst = Rate of integrated goods and service tax i.e., SGST+ CGST In the proposed GST regime, multiplicity of levies, in a manner of speaking, will ensue; CVD (levied in lieu of Excise duty) and SAD (levied in lieu of (VAT)) will be absorbed into IGST, yet, the following duties will not be subsumed but, will continue to be levied: (i) Basic Customs Duty, (ii) Anti-Dumping Duty, (iii) Safeguard Duties which shall be leviable on Camera, if applicable. Present Regime GST Regime Basic Customs Duty Basic Customs Duty Countervailing Duty Special Additional Duty of Customs Customs Cess Integrated GST (IGST+SGST) Other Additional Duties like Anti-Dumping Other Additional Duties like Anti-Dumping Duty. Safeguard Duty etc. Duty. Safeguard Duty etc. d. GST treatment for digital products 1. Digital product refers to information-based products that neverer manifest itself outside the digital environment. Principally, digital product requires electronic media as a form of delivery such as software, stream video, MP3, etc.

26 2. For GST purpose, supply of digital products over the internet is deemed as supply of service. 3. If a taxpayers supplies digital product via the internet or other electronic media, such as software or digital book to individual consumer or a business entity, it will be subject to GSTs 4. If digital products are sold via the internet and downloaded by an foreign customer it will be zero-rated but it is important to prove that the products are exported otherwise GST must be charged. 5. Normally, when digital product is downloaded directly from a supplier via the internet, it may be noted that the customer acquires data in the form of a digital signal and does not obtain the copyright. Nonetheless if the purchase of the digital product is inclusive of its intellectual property, it is still regarded as supply of service.