Section 9(5) vs. Section 52 of CGST Act-E-commerce operators!

The rapid growth of e-commerce in India has brought about significant changes in the taxation landscape, particularly under the Goods and Services Tax (GST) regime. Two critical provisions of the Central Goods and Services Tax (CGST) Act, 2017—Section 9(5) and Section 52—specifically address the role and responsibilities of e-commerce operators in the GST framework. While Section 9(5) places the onus on e-commerce operators to collect and pay GST on certain specified services, Section 52 introduces the concept of Tax Collected at Source (TCS) for online transactions. Understanding the distinctions between these sections is crucial for businesses operating in the e-commerce space to ensure compliance and avoid potential legal complications. This blog delves into the differences between Section 9(5) and Section 52 of the CGST Act, shedding light on how each impacts e-commerce operators.

Section 9(5) of the CGST Act, 2017

“(5) The Government may, on the recommendations of the Council, by notification, specify categories of services the tax on intra-State supplies of which shall be paid by the electronic commerce operator if such services are supplied through it, and all the provisions of this Act shall apply to such electronic commerce operator as if he is the supplier liable for paying the tax about the supply of such services:

Provided that where an electronic commerce operator does not have a physical presence in the taxable territory, any person representing such electronic commerce operator for any purpose in the taxable territory shall be liable to pay tax:

Provided further that where an electronic commerce operator does not have a physical presence in the taxable territory and also does not have a representative in the said territory, such electronic commerce operator shall appoint a person in the taxable territory to pay tax and such person shall be liable to pay tax.”

Section 52 of the CGST Act, 2017

“(1) 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 concerning such supplies is to be collected by the operator.”

Key provisions of the above sections

• Section 9(5) 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-

• Passenger transport services
• Housekeeping services
• Restaurant services (includes cloud kitchens)
• Accommodation services

Irrespective of whether the supplier is registered under GST, the e-commerce operators will be liable to pay tax as if it has supplied the goods/ services by itself. The supplies under this section will be mainly intra-state supplies.

• Section 52 requires the E-commerce operator to collect TCS on the net value of taxable supplies made by other suppliers through it. TCS shall be collected by the ECO when the ECO is collecting the consideration on behalf of the suppliers. The TCS amount collected by the ECO has to be remitted to the Government Treasury. The suppliers can avail credit of the TCS while paying their outward tax liability.

Difference between section 9(5) and section 52

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Disclosure in GSTR 1

• E-commerce operator who has collected and paid GST u/s 9(5) should show such supplies in GSTR 1- Table No. 15- Supplies u/s 9(5). Bifurcation of such supplies into B2B, B2C, Unregistered supplier to Registered buyer, and Unregistered supplier to Unregistered buyer shall be provided.
• A supplier who has supplied the goods or services through e-Commerce Operator, GST on which is collected and paid by the ECO u/s 9(5), shall show such supplies in GSTR 1 -Table No. 14- Supplies made through ECO.
• Also, a supplier who has supplied the goods or services through e-Commerce Operator and TCS is collected by ECO on such supplies u/s 52, shall show such supplies in GSTR 1 -Table No. 14- Supplies made through ECO.

Conclusion

In conclusion, Sections 9(5) and 52 of the CGST Act, 2017, clearly define the unique tax responsibilities placed on e-commerce operators in India's GST framework. Section 9(5) requires e-commerce operators to take on the role of collecting and paying GST on certain specified services as if they were the supplier, regardless of the supplier’s registration status. In contrast, Section 52 introduces the TCS mechanism, where e-commerce operators collect tax on the net value of taxable supplies made by other suppliers through their platform. While Section 9(5) primarily applies to intra-state supplies of specified services, Section 52 encompasses the broader spectrum of e-commerce transactions. 

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