What was the Issue:
Who is liable to pay TCS liability under Sec 52 of the CGST Act, 2017 in cases where multiple E-commerce Operators (ECOs) are involved in a single transaction of supply of goods or services or both.
Open Network for Digital Commerce (ONDC) is a new initiative of the department for promotion of industry and internal trade (DPIIT). So far, there is no clarity on who should be liable for TCS compliance under GST laws.
The confusion regarding liability of TCS deduction arises in the case of the market place model — where two intermediaries are involved in a single transaction.
Here, a buyer places an order on an e-commerce platform (buyer app) who then sources it from another e-commerce entity (seller app). The seller app then procures the goods from the actual supplier.
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Clarifications:
Situation 1:
In a situation where multiple ECOs are involved in a single transaction of supply of goods or services or both through ECO platform and where the supplier-side ECO himself is not the supplier in the said supply, who is liable for compliances under section 52 including collection of TCS?
Clarification:
In such a situation the compliances u/s 52 including collection of TCS, is to be done by the supplier-side ECO who finally releases the payment to the supplier for a particular supply made by the said supplier through him.
Example:
Buyer-side ECO collects payment from the buyer, deducts its fees/commissions and remits
the balance to Seller-side ECO.
Here, the Seller-side ECO will release the payment to the supplier after deduction of his fees/commissions and therefore will also be required to collect TCS, as applicable and pay the same to the Government in accordance with section 52 of CGST Act and also make other compliances under section 52 of CGST Act.
In this case, the Buyer-side ECO will neither be required to collect TCS nor will be required to
make other compliances in accordance with section 52 of CGST Act with respect to this
particular supply.
Situation 2:
where multiple ECOs are involved in a single transaction of supplyof goods or services or both through ECO platform and the Supplier-side ECO is himself the supplier of the said supply, who is liable for compliances under section 52 including collection of TCS?
Clarification:
In such a situation, TCS is to be collected by the Buyer-side ECO while making
payment to the supplier for the particular supply being made through it.
Example:
Buyer-side ECO collects payment from the buyer, deducts its fees and remits the balance
to the supplier (who is itself an ECO as per the definition in Sec 2(45) of the CGST Act).
In this scenario, the Buyer-side ECO will also be required to collect TCS, as applicable, pay the
same to the Government in accordance with section 52 of CGST Act and also make other
compliances under section 52 of CGST Act.
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