Wrong advice on requirement of GSTIN from sellers who are not liable for obtaining GSTIN
On Ebay.in page "https://sellglobal.ebay.in/seller-center/gst/" , under head "Who Should Register for GST?, inter-alia, following persons have been included, namely:- (i) Person who supplies via e-commerce aggregator (ii) Every e-commerce aggregator So far as it relates to legal position, clauses (ix) and (x) of section 24 of the Central Goods and Services Tax Act, 2017 (for short "CGST Act), inter-alia makes mandatory for following persons to obtain Registration (GSTIN), irrespective of their turnover, namely:- (ix) persons who supply goods or services or both, other than supplies specified under sub-section (5) of section 9, through such electronic commerce operator who is required to collect tax at source under section 52; (x) every electronic commerce operator who is required to collect tax at source under section 52; Sub-section (1) of Section 52 referred to in above quoted clauses of section 24 of the CGST Act run as follows:-- Section 52. Collection of tax at source.- (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 with respect to such supplies is to be collected by the operator. Explanation .-For the purposes of this sub-section, the expression "net value of taxable supplies" shall mean the aggregate value of taxable supplies of goods or services or both, other than services notified under sub-section (5) of section 9, made during any month by all registered persons through the operator reduced by the aggregate value of taxable supplies returned to the suppliers during the said month." According to this provision, electronic commerce operator required for making "Tax collection at source" is electronic commerce operator who also collects consideration (sale price) for goods (or services) sold through it. In case of eBay.in, in respect of goods sold through it, eBay.in does not collect sale price of goods. Sale price is collected by another company "Payoneer.com" for and on behalf of a seller. Therefore, eBay.in is not required to collect tax at source under section 52. In view of the above facts and legal position, clauses (ix) of section 24 of the said CGST Act, which makes mandatory for seller to obtain GST registration (GSTIN) does not apply to any seller. Second thing is that GST Law nowhere provides that electronic commerce operator shall not allow a seller if the seller does not have GSTIN. The GST Law also does not give power to electronic commerce operator to examine whether or not a seller (person) is liable for obtaining GST Registration, i.e. GSTIN. It is for the seller to ensure that if he is liable for obtaining registration, he should obtain registration. It is the GST Department which can examine if a person is liable for registration or not. If the department finds that a person being liable for registration, has not obtained registration, the department takes necessary action, including levy of penalty, against the person. Export of goods, or services, or both has, in sub-section (1) of section 16 of the Integrated Goods and Services Tax Act, 2017, been defined a zero rated supply, and therefore, is different from "Inter-State supply". Threshold exemption limit of turnover applies to an exporter - seller. I will like to mention it especially that GSTIN may be ID of the seller or supplier for other persons but for seller or supplier GSTIN creates liabilities under GST Law. Person holding GSTIN has to make compliances of all provisions of GST Laws. Such compliance involves expenditure and such exemption is to be borne by GSTIN holder out of its earnings and where cost of compliance exceeds the earnings, balance compliance cost is to borne by GSTIN holder from its pocket or out of its capital, leading to loss in business. This is the reason why small businesses are allowed threshold exemption. Due to complex nature of GST Laws, even in small cases, compliance cost of GST Laws remains significant. In my personal opinion, eBay.in has wrongly been advised to make submission of GSTIN mandatory for all sellers. Requirement of GSTIN should have been made optional. Also for starting a new business of supply of goods, or services, or both, GSTIN is not required. When a person (seller or supplier) becomes liable for obtaining GST Registration, GST Law allows 30 days time for applying for issue of Registration (GSTIN). My suggestions are: Particulars provided on eBay.in page https://sellglobal.ebay.in/seller-center/gst/ should be amended to make them in conformity of GST Laws; For creating sellers account, requirement of GSTIN should be made optional; An unregistered seller later may become registered. For this purpose, there should provision on the said page for updating GSTIN. In the CGST Act, expression "e-commerce aggregator" has neither been defined nor has been used. Matter is also connected with livelihood of small sellers. My request to eBay.in is that they should get re-examined the issue and do the needful at the earliest. Otherwise, they, and unemployed youths, both will be losers for no reason.