Section 22, and section 24, read with section 23, of the Central Goods and Services Tax Act, 2017 (An Act made by Parliament of India for the Union of India, hereinafter referred to as the CGST Act) provide that which persons shall be liable for obtaining GST Registration (GSTIN). However, section 25(3) of the said Act provides that a person who is not liable for obtaining registration in view of provisions of section 22 and 24 of the said Act, may obtain registration voluntarily. Section 2(107) of the CGST Act defines the expression "taxable person" to mean a person who is registered or liable to be registered under section 22 or section 24 of the CGST Act.
In various provisions of the CGST Act and other Goods and Services Tax Laws applicable in India, a taxable person has been made liable for making various compliances under the said Laws. In making compliances of various provisions of Laws, taxable person has to bear GST Compliance costs over and above the amount of tax payable on supply of goods and services tax (GST). GST payable by a supplier of goods or services may be recovered by the supplier from recipient of supply but he cannot recover GST compliance costs from recipients of supply. Compliance costs may mainly be classified in two categories, viz. (i) fiscal costs, and (ii) cost of self efforts and time costs.
Conditions created by the method of book-keeping in GST Laws become the major problem to businessmen. Maintenance of accounts for GST payment demands a series of necessary duties closely related to the rules imposed by the GST Laws, rules and regulations. There are a number of detailed rules concerning the 'book-keeping' arrangements to enable GST assessment to be carried out. Since adequate records and accounts of all GST trading are to be maintained to support tax claims, businessmen must provide invoices, tax returns, book-keeping and accounts in agreement with the GST legislation. Such records are part of the expenses which the GST registered business has to incur to comply and to fulfill its role in collecting GST revenue. These are part of the tax compliance costs.
Goods and Services Tax is a destination based consumption tax and is collected by using input tax credit system. Taxpayer is required to furnish various statements containing details of each supply of goods, or services, or both received, and each supply of goods, or services, or both made, by a taxpayer. Details are also required to be matched with the suppliers from whom supplies have been received. Admissibility of input tax credit depends on the manner in which goods and services received from the supplier are used or utilised. Statement of input tax credit is required to be submitted separately. Small businesses generally make transactions of petty amounts. Large number of transactions increase compliance burden. All returns and statements are required to be submitted periodically. Law itself provides that registered person may authorise an approved goods and services tax practitioner to furnish various statements. In cases of zero rated supplies of goods, or services, or both, for the purpose of claiming refund, supplier is required to furnish indemnity bond. All these requirements add to compliance cost of GST Law.
In cases of small businesses, all these compliances at least require part time services of an accountant as well as services of a goods and services tax practitioner. Readers of the views expressed here may themselves make an estimate of compliance costs. In small cases, aggregate of compliance costs may be significant as compared to earnings from business. Even in some cases it may exceed earnings from business making it impossible to run business. Compliance cost of GST Laws is the sole reason for allowing threshold limit of turnover below which small businesses are not required to make compliances.
For the reasons stated above, I will suggest that if a small businessman, if under the GST Law he is not liable for obtaining registration, should not obtain registration. A small supplier, before obtaining voluntary registration should think twice before seeking voluntary registration. He should essentially assess compliance costs and earnings from business before obtaining voluntary registration. It is needless to say that where law makes it mandatory for the supplier to obtain registration he must obtain GST Registration (GSTIN).
So far as it relates to tax collection at source under section 52 of the CGST Act, said provision applies to e-commerce operator through whom supply is made and such e-commerce operator also collects sale consideration from purchaser of goods. In case of eBay.in, sale consideration is collected by Payoneer.com for and behalf of seller. Therefore, provision of section 52 neither applies to eBay.in nor to seller of goods.
Tax Policy of eBay.in is available on "https://www.ebay.com/help/policies/selling-policies/tax-policy?id=4348&st=12&pos=3&query=Tax%20polic..." page of eBay.in. Said page provides as follows:
"Sellers must follow all tax regulations that apply to eBay sales.
Our policy helps provide guidance on tax. As eBay can't give tax advice, sellers should contact the appropriate tax authority for more information about their tax obligations."
"Sellers are responsible for paying taxes associated with using eBay, in accordance with all applicable laws."
"Please note that eBay will share your information with government authorities if required to do so by law."
There is nothing in the policy which says that seller will furnish his GSTIN even if he (seller) claims that he is not liable for GST Registration. If the seller claims that he is not liable for GST Registration (GSTIN), it is sufficient. Government Tax Department may always seek information about seller. For this purpose, eBay.in may obtain photo ID with address proof. eBay.in already receives PAN, Bank Account details, IEC, which are relevant for tracing seller. Other information which a tax department may need is details of goods sold through eBay, fee received by eBay.in from seller. From Payoneer.com, department may obtain same details.
Simple thing is that where seller claims that he is not liable for obtaining registration, even the Tax Department cannot ask him to produce GSTIN. However, if the Department has any information which makes the seller liable for registration, the Department can register him and can allot GSTIN, and it may take action against the seller. He cannot take action against eBay.in or Payoneer.com.
Clauses (ix) and (x) of section 24 of the CGST Act run as follows:-
"(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;"
Section 52 of the CGST Act applies to those e-commerce operators through whom supply (sale) is made and who also collects consideration (sale price) for the supply made through it. Since, eBay.in does not collect sale / supply consideration, under section 52, eBay.in is not required to collect tax at source. Therefore, clauses (ix) and (x) do not apply to seller and eBay.in.
On page "https://sellglobal.ebay.in/seller-center/gst/" of eBay.in, clauses (ix) and (x) have wrongly been provided as follows:
"Person who supplies via e-commerce aggregator
Every e-commerce aggregator"
This has created wrong impression to conclude that for every person who supplies via e-commerce operator, and for every e-commerce operator, it is mandatory to obtain GST Registration (GSTIN). This has resulted in loss of business for eBay.in and small sellers who could not avail eBay.in services.
My suggestion is that eBay.in should make it optional to have GSTIN. Hope that eBay.in administration will consult some GST Law knowing person and do the needful.
