E-commerce operator must register for Tax Collected at Source (TCS) under GST
A thorough analysis of Changejar Technologies Pvt. Ltd.’s business model and its compliance with GST legislation has been conducted.The main concerns are whether or not they qualify as an e-commerce operator and what taxes they must pay in accordance with Section 52 of the CGST Act, 2017
Analysis:
- Nature of Business: Changejar is an online marketplace that acts as a middleman between buyers and Digital Gold India Private Limited (DGIPL) to facilitate the trade of digital gold.
- Interpretation of Law: The applicant argues that they function as a mere agent for DGIPL, citing clauses from their agreement. However, the Authority for Advance Ruling (AAR) refutes this claim, asserting that the applicant qualifies as an e-commerce operator under Section 2(45) of the CGST Act, 2017.
- Applicability of Section 52: E-commerce providers are required by Section 52 to collect taxes at the source. The AAR determines that the applicant is obligated to collect tax under Section 52, even if the applicant claims to be operating only as an agent.
- Registration Obligation: In accordance with Section 24(x) of the CGST Act, 2017, the applicant must register as an electronic commerce operator subject to tax collection at source.
RULING
a. The applicant qualifies as an electronic commerce operator and is not an agent of the third party supplier M/s DGIPL, and hence is covered under the Notification No. 52/2018 – Central Tax, read with Section 52 of CGST Act, 2017.
b. The applicant, being an electronic commerce operator, is required to collect tax at source under Section 52 of the CGST Act 2017 and thus is liable to be registered compulsorily under Section 24(x) of the CGST Act 2017 reqd with the provisions of the Rule 12 of CGST Rules 2017.
