INDIRECT TAX ASPECTS-E- COMMERCE

Sudipta Bhattacharjee

PrincipalTax Litigation & Controversies

E-COMMERCE-SERVICE TAX ISSUES

1 3

1.Aggregator:

Constitutional Validity

2. Points to Ponder

“Person liable to

pay” Service tax

under Finance Act,

1994

Other related topics

Agenda

2

2

2. Points to Ponder

3.

Issues in relation to

online booking of Flights

+ Hotels

Aggregator: The

Concept and the

relevant

amendments made

in the Finance Act,

1994

1 3

1.Aggregator:

Constitutional Validity

2. Points to Ponder

“Person liable to

pay” Service tax

under Finance Act,

1994

Other related topics

Agenda

3

2

2. Points to Ponder

3.

Issues in relation to

online booking of Flights

+ Hotels

Aggregator: The

Concept and the

relevant

amendments made

in the Finance Act,

1994

Section 68 (1)-

Section 68(2)- Central

Govt. can specify

‘Person liable to pay’ for

taxable services as may

be notified

‘Default rule’Rule 2(1)(d) Service Tax

Exception

“Person liable to pay” service tax under Finance Act

4

‘Default rule’

Liability to pay tax is

on ‘Service Provider’

Rules, 1994 defines -‘Person liable to pay’

Notification 30/2012 –notifies services and the

extent of liability of the

‘Person liable to pay’

1 3

1.Aggregator:

Constitutional Validity

2. Points to Ponder

“Person liable to

pay” Service tax

under Finance Act,

1994

Other related topics

Agenda

5

2

2. Points to Ponder

3.

Issues in relation to

online booking of Flights

+ Hotels

Aggregator: The

Concept and the

relevant

amendments made

in the Finance Act,

1994

“a person, who owns and manages a web based software

application, and by means of the application and a

communication device, enables a potential customer to

connect with persons providing service of a particular kind

under the brand name or trade name of the aggregator”

Rule 2(1)(aa) of the Service Tax Rules, 1994, defines the term “aggregator” as:

‘Aggregator’- The Concept

6

under the brand name or trade name of the aggregator”

This amendment will impact online infrastructure/web based software business platform industry

In a nutshell

Any person who owns and manages a web

based software application

Through such application, enables a potential customer to

connect with a service provider

Services are provided under the brand name or trade name of the

aggregator

MakeMy Trip/ Ibibo/ Travel Guru

• MakeMy Trip owns a software application, which is

used by the customers to book the hotels/ flights

etc.

• Through the application software, the customer is

connected to the actual service provider i.e.

Taxi 4 Sure/ OLA cabs

• Taxi 4 Sure/ OLA cabs own a software application,

which is used by the customers to book the cabs

• Through the application software of Taxi 4 Sure/

OLA, the customer is connected to the actual

service provider i.e. taxi driver

DIFFERENT E-COMMERCE BUSINESS MODELS

‘Aggregator’- The Concept

7

connected to the actual service provider i.e.

airlines/ hotels (Indigo/ Hyatt)

• The services are then provided by the service

provider to the customer

Whether MakeMy Trip/ Ibibo/ Travel Guru qualify as an aggregator?

No, since the services are provided by the service provider under their own brand name i.e. Indigo/ Hotel Hyatt and not under the brand name of MakeMyTrip.

service provider i.e. taxi driver

• The services are provided by the cab owner to the

customer

Whether Taxi 4 Sure/ OLA cabs would qualify as an aggregator?

Yes, since the service provider uses the brand name of OLA/Taxi 4 Sure to render the services

Notification No.

Rule 2(1)(d) of the

Service Tax Rules,

1994, defines “person

liable to pay tax”:

(AAA) in relation to service provided or agreed to be provided by aperson involving an aggregator in any manner, the aggregator of theservice

THE AGGREGATOR – ‘PERSON LIABLE TO PAY’

‘Aggregator’- Liable to pay Service Tax

8

A new entry i.e. entry no. 11, inserted which provides as under:Notification No.

30/2012 (as amended vide Notification No.

07/2015)

11. in respect of any service provided or agreed to be provided by a person involving an aggregator in any manner

Nil 100%

Sl. No. Description of a service Percentage of service tax payable by the person providing service

Percentage of service tax payable by any person liable for paying service tax other than the service provider

1 3

1.Aggregator:

Constitutional Validity

2. Points to Ponder

“Person liable to

pay” Service tax

under Finance Act,

1994

Other related topics

Agenda

9

2

2. Points to Ponder

3.

Issues in relation to

online booking of Flights

+ Hotels

Aggregator: The

Concept and the

relevant

amendments made

in the Finance Act,

1994

No charging section or Excessive delegation :

GROUNDS FOR CHALLENGING THE CONSTITUTIONAL VALIDITY OF THE LEVY ON ‘AGGREGATOR’

‘Aggregator’- Constitutional Validity

10

No charging section or machinery provisions provided under the Finance Act, 1994 fastening liability to pay tax on an ‘Aggregator’

Liability has been created only through amendment in Service Tax Rules, 1994 and Notification No. 30/2012 (‘RCM’).

No corresponding amendment in the Act.

Point of Taxation (PoT) not clearly ascertainable

• Rule 3 of PoT Rules – PoT is the

date of issuance of invoice or

payment, which ever is earlier.

• Aggregator may not be privy to

the issuance of invoice or receipt

of payment - Rule 3 impossible

to apply

1 3

1.Aggregator:

Constitutional Validity

2. Points to Ponder

“Person liable to

pay” Service tax

under Finance Act,

1994

Other related topics

Agenda

11

2

2. Points to Ponder

3.

Issues in relation to

online booking of Flights

+ Hotels

Aggregator: The

Concept and the

relevant

amendments made

in the Finance Act,

1994

Whether the abatementunder Notification 26/2012

would be available to an

Aggregator?

Whether ‘Premium’ charged by the Aggregator

would be included in the

taxable value?

Explanation:

Points to Ponder- Aggregator of Radio Taxis/Hotels

12

Whether the ‘Discounts’offered and borne by the

Aggregator would form a

part of the taxable value?

Explanation:

DETERMINATION OF ASSESSABLE

VALUE

Whether ‘Penalty’ paid for

deficiency in services

would be included in the

taxable value?

Explanation

1 3

1.Aggregator:

Constitutional Validity

2. Points to Ponder

“Person liable to

pay” Service tax

under Finance Act,

1994

Other related topics

Agenda

13

2

2. Points to Ponder

3.

Issues in relation to

online booking of Flights

+ Hotels

Aggregator: The

Concept and the

relevant

amendments made

in the Finance Act,

1994

• Tour operators offer package deals to the customer- covering flight tickets as well as room booking

• Under Notification 26/2012, ‘Tour-operator’ solely engaged in booking of accommodation –liable to pay tax at 10% of the value

• Air- flight tickets – Rule 6(7) STR- tax to be paid at 0.07% of the base fare for domestic and 1.4% for International bookings

• In alternate, ‘Tour-operator’ required to pay tax

• ‘Tour operators’ use Computer Reservation System (‘CRS’) or Global Distribution System (‘GDS’) companies for booking of hotels/ flight tickets/car rentals etc.

• The CRS/GDS Companies have an arrangement with the airlines and keep a track of the inventory flight seats.

• CRS/GDS companies pay an incentive to the “Tour operators’ for using their system for

Issues in relation to online booking of flights+ hotels

14

• In alternate, ‘Tour-operator’ required to pay tax at 25% of the value of Composite Package Price

Whether a Composite package can be vivisected into two packages– Air ticket and

Hotel room booking?

“Tour operators’ for using their system for booking

Whether the incentive paid by CRS/GDS companies to the tour-operators is classifiable

as ‘BAS’?

• Makemy Trip India Pvt. Ltd v. CCE (Tri.-Chd.) – Where two provisions areapplicable, it is the choice of the assessee toavail the benefit of the more beneficialprovision-Pre deposit waived

• Riya Travel and Tours (I) Pvt. Ltd. .v CST(Bom. HC) – Question is whether incentivesare for promotion and marketing of thebusiness of ‘CRS’/ ‘GDS’ companies –arguable case- Pre-deposit of 25% ofdemand pertaining to normal period

• Makemy Trip India Pvt. Ltd v. CCE (Tri.- Del.)-25% pre-deposit.

MakeMy Trip (“MMT”)

Books a room for INR 5000

MMT pays INR 4500 (inclusive of

ST)

MMT collects INR4500 (incl. ST) for renting and INR 500

(incl. ST) towards convenience fee, from the

Customer

DGCEI Investigation against MakeMy Trip (MMT)

15

Customer *Hotel

INR 5000ST)Customer

*Some of the hotels are not registered with the Department being below the threshold limit

MMT discharges ST on the Convenience fee (INR 500) collected from the customer

Allegation:

Whether MMT

MMT collected ST on ‘Renting of Rooms’ even for Hotels which were not registered with the Department. Such ST was not required to be collected and has not been deposited with the Department

Recent DGCEI Investigation against MMT

16

MMT violated Section 73A(2)?

Section 73A(2) – “Where any person who has collected any amount, which is not required to be collected, from any other person, in any manner as representing service tax, such person shall forthwith pay the amount so collected to the credit of the Central Government”

Section 89-(1) Whoever commits any of the following offences, namely,-(d) collects any amount as service tax but fails to pay the amount so collected to the credit of the Central Government beyond a period of six months from the date on which such payment becomes due, shall be punishable,-where the amount exceeds fifty lakh rupees, with imprisonment for a term which may extend to seven years

E-COMMERCE-EXCISE DUTY ISSUES

Activities generally carried out by e-commerce players like Amazon

Debundling: Fragmentation of various products received in wholesale packages into smaller packages

Sorting: Re-arrangement of similar/identical products from

wholesale packs

E-Commerce Excise Duty Liability

18

Sold as set

stickering:

Bubble wrapping or sensitive material covering of goods sold in combined packages

Bagging: Putting the individual items in bags

Bundling: Bundling of two or more products sold as combined pack

Blank Stickering: Affixing barcodes for identification

*Whether these

The activities are for logistical purposes

No changes or alterations in the retail packs of the merchants

These activities do not amount to

REASONS CONCLUSIONISSUE

E-Commerce-Excise Duty Liability

19

activities fall under the definition of “Manufacture”?

packs of the merchants

No packing or repacking from bulk to

unit containers

The outer packing for safety cannot be equated with the processes of packing and repacking

amount to manufacture – Excise duty not leviable.

*Reliance on: IN RE : Amazon Seller Services Pvt. Ltd.

E-COMMERCE- VAT ISSUES

1

Models of E

commerce

3

Key VAT Issues –

4

Key VAT

Amendments – E-

Commerce

Agenda

21

2

Amazon – Where it

all started

Key VAT Issues –

Inter-State sale v.

local sale

5

Key Entry Tax

Amendments and

the impact

thereof – E-

Commerce

1

Models of E

commerce

Agenda

3

Key VAT Issues –

4

Key VAT

Amendments – E-

Commerce

22

2

Amazon – Where it

all started

Key VAT Issues –

Inter-State sale v.

local sale

5

Key Entry Tax

Amendments and

the impact

thereof – E-

Commerce

Basic E-Commerce models-Model 1

Stock and Sell Model

� E-Commerce companies are owners of the goods and operate a e-commerce portal for receiving of booking/order.

� The property in goods is transferred from the E-

23

transferred from the E-commerce company to the customer. The goods are delivered to the customer and consideration is received by the E-Commerce company.

� Eg. Myntra.

Model 2- Market Place Model

� Three parties are involved- (a) E-Com. Company which acts as afacilitator (b) the vendor involved inactual sale and purchase of goodsand (c) the customer

� The customer places an order on theportal of the e-commerce company

� The E-Commerce company informs

24

� The E-Commerce company informsthe vendor about such order.

� The vendor raises an invoice on thecustomer and the property in goods istransferred from the vendor directly tothe customer.

� The vendor pays a commission to theE-commerce company

� Variation to the market place model.

� Additionally, the Vendor stores itsproducts in the fulfilment centre/warehouse of the E-Commercecompany which is registered as anadditional place of business of theVendor.

� Goods to the customers are

Model 3- Fulfillment Centre Model

25

� Goods to the customers aredispatched by the E-Com. Companyfrom its warehouse; however,invoice is raised in the name ofsupplier.

� The property in goods is transferredfrom the Vendor to the Customer.

� Consideration for the goods is alsoreceived by the E-Com. company,who after retaining its commission,remits the remaining amount to thesupplier. Eg.:- Amazon.

1

Models of E

commerce

Agenda

3

Key VAT Issues –

4

Key VAT

Amendments – E-

Commerce

26

2

Amazon – Where it

all started

Key VAT Issues –

Inter-State sale v.

local sale

5

Key Entry Tax

Amendments and

the impact

thereof – E-

Commerce

Amazon – Where it all started

Amazon-Model and

Fact pattern

Goods of the vendors are stored at a warehouse/ fulfilment centre owned

by Amazon. The vendors treat the Amazon warehouse as their additional

place of business.

On receipt of order placed by customer on the web-portal of Amazon, the

goods are delivered from the warehouse/fulfillment centre to the

respective customers.Karnataka Government proposes to levy 1 % TDS on all payments made

27

The consideration is remitted by Amazon to the vendor after retaining a

commission

Issues raised by

VAT Department

Amazon to undertake registration as a dealer under VAT as it qualifies as

a dealer under the category of commission agent engaged in supplying

or distributing goods on behalf of the principle

Amazon is liable to discharge VAT on transfer of goods from the

warehouse to the customer as they qualify as local sales

Karnataka Government proposes to levy 1 % TDS on all payments madeby Amazon to the sellers.

Amazon – Where it all started

Arguments of Amazon

The taxable event under the Karnataka VAT is the sale of goods. There is

no sale within the state of Karnataka. Amazon is discharging service tax

on the services provided to the seller.

Amazon and the vendor transact on principal to principal basis. Hence,

Amazon cannot be regarded as a commission agent

28

of Amazon Amazon cannot be regarded as a commission agent

Amazon does not qualify as a dealer under the VAT Act as it is a mere

facilitator and is not engaged in the buying or selling of goods.

Points to Ponder

Whether Amazon would

qualify as a dealer as the

definition of dealer under

Karnataka VAT Act

includes a person

supplying or distributing goods ???

Whether sale of goods

from the fulfilment

centre to the customers

within Karnataka would

qualify as a local sale and leviable to VAT???

29

goods ???and leviable to VAT???

If Amazon qualifies as a

dealer can tax liability be fastened on Amazon??

1

Models of E

commerce

Agenda

3

Key VAT Issues –

4

Key VAT

Amendments – E-

Commerce

30

2

Amazon – Where it

all started

Key VAT Issues –

Inter-State sale v.

local sale

5

Key Entry Tax

Amendments and

the impact

thereof – E-

Commerce

Key VAT Issues - Inter State Sale v. Local Sale

Case Department’s contentions

Decision

Flipkart v. State of

• The sale was a local No specific findings by the VAT Authority as to why the

IssueVAT Department is seeking to levy VAT on e-commerce companies acting merely as facilitators for transactions of sale and purchase effected through their online portals.

31

State of Kerala 2015-VIL-482-KER

(Myntra

had also

filed a

similar writ

petition)

sale as the goods were

delivered within the

state of Kerala from an

online portal whose

situs was Kerala.

• Even if Flipkart is not

the seller, it is liable to

VAT under section 16(13) of the Kerala

VAT Act

transactions are treated as local sales as against inter-

state sales or why Flipkart is treated as a dealer. The

notices have pre-determined the guilt of the Assessee

(Flipkart)

The situs of the sale is irrelevant for determining

whether a sale is a local sale or inter-state sale

As the seller (W.S. Retail) had declared nil turnover on

the basis that the entire turnover pertained to inter-

state sales, the revenue authorities cannot levy tax or

impose penalty on Flipkart with respect to the same

turnover

The order of the Hon’ble Kerala High Court quashing

the demand of penalty is based on the lack of findings

in the show cause notice and impugned order seeking to impose penalty. This case does not deal with merits

of the matter and beyond a point, cannot be relied upon

as a precedent by e-commerce companies to contend

that no tax is leviable on such transactions

1

Models of E

commerce

Agenda

3

Key VAT Issues –

4

Key VAT

Amendments – E-

Commerce

32

2

Amazon – Where it

all started

Key VAT Issues –

Inter-State sale v.

local sale

5

Key Entry Tax

Amendments and

the impact

thereof – E-

Commerce

Dealers conducting sales through web portals/ e-commerce companies required to furnish details of such sales in the prescribed Annexure 1E

For details regarding the Notification

Any person who effects sales where the order is placed through electronic media is required to furnish information in the prescribed Form EL-1.- Section 80A of the Rajasthan VAT Act inserted w.e.f. 1.04.2015

Delhi - Notification No. F.3 (20)/ Fin (Rev-I)/2015-2016/dsvi/906 dated 12.11.2015

Rajasthan - Notification No. F.16 (708) TAX/CCT/2015/7307 dated 31.12.2015

Key VAT Amendments- E-Commerce

33

For details regarding the NotificationAct inserted w.e.f. 1.04.2015

For details regarding the section

All E-commerce companies, transporters, courtiers effecting delivery of goods or intermediaries receiving amounts in connection with goods sold through e-commerce are liable to furnish information under Form EL-1

All companies and entities maintaining an e-commerce website shall file monthly details of goods sold through websites in the prescribed format-Section 54A inserted w.e.f 29.07.2015

For details regarding the section

Rajasthan - Circular No. F. 16 (95) Tax/ CCT/14-15/2170 dated 28.01.2016 Section 54A of Kerala VAT Act

VAT Amendments

1

Models of E

commerce

Agenda

3

Key VAT Issues –

4

Key VAT

Amendments – E-

Commerce

34

2

Amazon – Where it

all started

Key VAT Issues –

Inter-State sale v.

local sale

5

Key Entry Tax

Amendments and

the impact

thereof – E-

Commerce

The definition of ‘dealer’ has been amended toinclude persons supplying goods within thestate through the system of electroniccommerce

Details regarding the definition of dealer

Definition of Dealer- Section 2(1)(b) of the Bihar Entry Tax Act

Section 9A of the Assam Entry Tax Act and Notification issued theref

Key Entry Tax Amendments- E-Commerce

Section 9A empowers the Commissioner toprescribe a simple procedure for collection ofentry tax on entry of goods made through onlinepurchase or e-commerce and also for collectionof entry tax from a person other than an importerbut on behalf of the importer

35

Details regarding the definition of dealer

Notification issued under section 9A lays downthe procedure for collection of entry tax on goodsbrought into the local area for delivery to thecustomer by any transporter, courier, agent or anyother person.

Details regarding the section and Notification

Section 4A empowers the Commissioner of Taxes to prescribe a simple procedure for collection of entry tax on entry of goods made through online purchase or e-commerce and also for collection of entry tax from a transporter/ courier/delivery

agent/agent/goods carrier and any other person (importer),

who intends to bring such goods, whether on his own account

Key Entry Tax Amendments- E-Commerce

Section 4A of Uttarakhand VAT Act and Notification issued thereunder

36

who intends to bring such goods, whether on his own account or on behalf of any other person, into the State from outside the State

Notification issued under section 4A lays down a rate of entry tax of 10% on the value of goods which are purchased or ordered through online shopping or E- commerce and consigned into the local area.

Details regarding Section 4A of the Uttarakhand VAT Act and

Notification issued thereof

Section 3 (charging section) of theBihar Entry Tax Act provides for levyof tax on a dealer who is liable to payVAT under the Bihar VAT Act onimport of goods for the development

Section 9A intends for thelevy of tax only on thoseparties, which operate onbehalf of the importer, be itthe seller or the buyer.

Section 4A provides forcollection of entry tax onthe entry of goods insidethe local area of theState made through

Bihar Assam Uttarakhand

GROUNDS FOR CHALLENGING THE VALIDITY OF THE LEVY OF ENTRY TAX ON ONLINE E-COMMERCE PURCHASES

Impact of Entry Tax Amendments- E-Commerce

37

import of goods for the developmentof trade commerce and industry inBihar.

• Explanation III goes beyond thecharging section in that it providesfor every person to be a dealerwho merely supplies goods to abuyer (even if he is not payingVAT under the Bihar VAT Act).

• Online purchase of goods is notfor development of tradecommerce or industry but forpersonal use and consumption.

the seller or the buyer.

Notification which seeks tolay down procedure forcollection of entry tax fromtransporters, courier, agentsor any other person goesbeyond section 9A as itseeks to levy entry tax onparties acting on a principalto principal basis and not onbehalf of the importer ascontemplated under section9A.

State made throughonline purchase or e-commerce.

• No clarity as to thetaxable person.

• Notification does notprescribe for aprocedure as hasbeen mandated bysection 4A of theUttarakhand EntryTax Act.

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Section 2- Definition of Dealer-Bihar Entry Tax Act

2. Definitions

(1) In this Act unless the context otherwise requires

(b) 'Dealer' means any person who, whether regularly or otherwise, in the course of business, buys, sells, supplies, distributes or does

anything incidental to such buying, selling, supplying or distributing of goods, directly or indirectly, whether for cash, or for deferred payment

or for commission, remuneration or other valuable consideration and it includes -

(A) a local authority;

(B) a Hindu undivided family;

(C) a company, or any society (including a co-operative society), club, firm, association of persons or body of individuals, whether incorporated or not,

which carries on such business;

(D) a society (including a co-operative society), club, firm or association which buys goods from, or sells, supplies or distributes goods to its members;

(E) an industrial, commercial, banking or trading undertaking, whether or not of the Central Government or of any of the State Governments or of a local

39

(E) an industrial, commercial, banking or trading undertaking, whether or not of the Central Government or of any of the State Governments or of a local

authority;

(F) a casual trader;

(G) a commission agent, broker, factor, a del-credere agent, an auctioneer or any other mercantile agent, by whatever name called, who carries on the

business of buying, selling, supplying or distributing goods on behalf of the principal.

Explanation I- Every person who acts as an agent on behalf of a dealer residing outside the State of Bihar and buys, sells, supplies or distributes goods in

the State or acts on behalf of such dealer as -

(a) a commission agent, broker, factor, a del-credere agent, an auctioneer or any other mercantile agent, by whatever name called; or

(b) an agent for handling goods or documents of title to goods; or

(c) an agent for the collection or the payment of the sale price of goods or as a guarantor for such collection or payment; or

(d) a local branch of a firm or company situated outside the State, shall be deemed to be a dealer for the purpose of this Act.

Explanation II- A Government which whether or not in the course of business, buys, sells, supplies or distributes goods, directly or otherwise, for cash or

for deferred payment or for commission, remuneration or other valuable consideration, shall be deemed to be a dealer for the purpose of this Act."

Explanation III- Every person engaged in the business of supplying or delivering Scheduled goods to any buyer or importer within the State

through any System of electronic commerce or otherwise shall be deemed to be a dealer for the purpose of this Act.

Assam Entry Tax Act

SECTION 9A OF THE ASSAM ENTRY TAX ACT, 2008.

The Commissioner of Taxes, with prior approval of the State Government, may by notification in the Official Gazette formulatesimple procedure for the collection of entry tax on entry of specified goods into any local area made through onlinepurchase or e-commerce and such procedure may also provide for collection of entry tax from a person other than animporter but on behalf of the importer".

RELEVANT PART OF NOTIFICATION No. CTS-62/2014/5 dated 23rd December, 2014

Whereas due to stupendous growth of e-commerce and online sale or purchase of goods during the recent times, rapidly

increasing number of consignments of consumer goods taxable under the Assam Entry Tax Act, 2008 (Assam Act XII of 2008)

40

increasing number of consignments of consumer goods taxable under the Assam Entry Tax Act, 2008 (Assam Act XII of 2008)are being imported into the local area of the State for the purpose of delivery to persons purchasing goods taxable under thesaid Act online for their own use or consumption;

And whereas, as empowered by section 9A of the Assam Entry Tax Act, 2008 (Assam Act XII of 2008), the Commissioner ofTaxes considers it necessary to formulate the simple procedure for the collection of entry tax on entry of specified goods into anylocal area made through online sale or purchase as envisaged under the said section of the said Act;

Now, therefore, in exercise of the powers conferred by the provisions of section 9A of the Assam Entry Tax Act, 2008 (Assam ActXII of 2008), the undersigned is pleased to notify with prior approval of the State Government, the following procedure forcollection of Entry Tax on specified goods brought into the local area of the State from places outside the State for the purposeof delivery to the concerned consumers on account of online sale or purchase:-

(1) Every transporter, courier, agent or any other person, as the case maybe, before transporting or causing totransport specified goods liable to Entry Tax from places outside the local area of the State for the purpose of deliveryto buyers in the local area pursuant to online sale or purchase shall make online data entry of the consignment beforedespatching the consignment after obtaining registration from the respective prescribed authority.

(2) Such transporter shall make an application for obtaining user ID and password for online declaration of the consignments

brought against online sale or purchase transaction. The application shall be in the following format annexed as Annexure I :-

Uttarakhand Entry Tax Act

4-A TAX ON E-COMMERCE

The Commissioner, with prior approval of the State Government, may by notification formulate a simple procedure for the collection of entry tax on entry of specified goods into local area of State of Uttarakhand made through online purchase or e-commerce and such procedure may also provide for collection of entry tax from a transporter/ courier/delivery agent/agent/goods carrier and any other person (importer), who intends to bring such goods, whether on his own account or on behalf of any other person, into the State from outside the State or outside the Country, in connection otherwise of business or for personal use and such a transporter /courier/ delivery agent/agent/goods carrier and any other person (importer) shall be liable to pay entry tax on total value of such goods at such rate and in such manner, as may be prescribed thereunder.

41

Notification No. 977/2015/22(120)/XXVII(8)/2008 dated: 10th December, 2015

WHEREAS, the State Government is satisfied that it is expedient so to do in public interest

NOW, THEREFORE, in exercise of the powers conferred by sub-section (1) of section 4 of "the Uttarakhand Tax on Entry of Goods Into Local Areas Act, 2008" (Act No. 13 of 2008) read with section 21 of the Uttar Pradesh General clause Act, 1904 (UPAct No. 1 of 1904) (as applicable to the State of Uttarakhand), the Governor is pleased to direct that, the tax on entry of goods specified in column 2 of the Schedule below shall be levied and collected at the rate specified in column 3 of the Schedule, with effect from the date of publication of this Notification in the Gazette.

SI. No Description of goods Rate of Tax

1 All kind of goods purchased or ordered through online shopping or E-Commerce and consigned into the local area of the State of the Uttarakhand for personal use

10 Percent of the value of goods

Delhi VAT Notification

RELEVANT PART OF NOTIFICATION No. . F.3(20)/Fin(Rev-I)/2015-2016/dsvi/906-Dated 12th November, 2015

In exercise of the powers conferred by section 102 of the Delhi Value Added Tax Act, 2004 (Delhi Act 3 of 2005), the Lt. Governor of the National Capital Territory of Delhi, hereby, makes the following rules further to amend the Delhi Value Added Tax Rules, 2005, namely:-

RULES

1. Short title and commencement.-

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(1) These rules may be called the Delhi Value Added Tax (Amendment) Rules, 2015.

(2) They shall come into force on the date of their publication in the Delhi Gazette except the amendments made vide clauses (i), (ii), (vii) and (viii) of rule 2 of these rules which shall be effective for the returns for the tax periods succeeding the tax period ending on 30th September, 2015 and the amendments made vide rules 3 and 4 of these rules shall be deemed to have come into force from 1st October, 2015.

2. Amendment of Form DVAT 16.-

In the Delhi Value Added Tax Rules, 2005, (hereinafter referred to as the principal Rules), in the Forms appended thereto, in Form DVAT 16,-

(i) in field R5, the row pertaining to sub-field R5.10 shall be omitted;

(ii) in field R6, the row pertaining to sub-field R6.3(8) shall be omitted;

(iii) in the instructions after field R12, after the instruction SI. No. 9, the following instruction shall be inserted, namely:-

"10, All dealers conducting sales through web portals / e-platforms of other e-commerce companies / firms are required to furnish details of such sales in Annexure 1E. In case of making sales through more than one e-commerce company / firm, separate formats in Annexure 1E are to be filed for each of the e-commerce company / firm. It is further clarified that all the sales in Annexure 1E have to be mandatorily included in the sales figures in Annexure 2B." ;

Rajasthan – Section 80A

80A. Liability to furnish information by certain persons.-

(1) Any person who-

(i) effects sale or purchase within the State of Rajasthan, or places offer for sale or purchase so as to be accessible, visible or audible within the State of Rajasthan, through electronic media; or

(ii) transports, receives for transportation or delivers goods in pursuance of sale or purchase effected within the State of Rajasthan through electronic media; or

(iii) receives any amount in connection with the goods sold or purchased within the State of Rajasthan through electronic media, whether for himself or on behalf of the seller or purchaser,

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electronic media, whether for himself or on behalf of the seller or purchaser,

shall furnish or cause to be furnished, such information, for such period, in such manner, and within such time, to such officer or authority, as may be notified by the Commissioner.

(2) Any person who fails to furnish information within the period notified under sub-section (1) shall be liable to pay by way of penalty a sum not exceeding rupees one lac, and in case of a continuing default, a further penalty of rupees one thousand for every day of such continuance.

Kerala VAT – Section 54A

54A. Entities engaged in electronic commerce to furnish certain details.-

All companies and entities maintaining an electronic commerce website shall file monthly, the details of goods sold through such sites in such form as may be prescribed, which are transported into or outside the State as a result of such sale. For this purpose they shall take registration under this Act, in such manner as may be prescribed.

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Taxability of ‘premium’ collected form the customers

Sr No Particulars Amount (Rs)

1 Basic fare Rs 1000/-

2 Premium 1.5X of basic fare Rs 500/-

3 Amount paid by the customer Rs 1500/-

4 Amount retained by the Service Provider Rs.1000/-

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4 Amount retained by the Service Provider Rs.1000/-

5 Amount retained by the Aggregator Rs. 500/-

Service tax liability of the Aggregator

• As an Aggregator, on Rs. 1500 (after claiming applicable abatement)

• As Service Provider, on Rs. 500 as ‘Commission’ received

Taxability of ‘discount’ offered by Aggregator

Sr No Particulars Amount (Rs)

1 Basic fare Rs 1000/-

2 Discount offered to the customer Rs 200/-

3 Amount paid by the Customer to Service provider Rs 800/-

4 Amount paid by Aggregator to the Service Provider Rs.200/-

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4 Amount paid by Aggregator to the Service Provider Rs.200/-

Service tax liability of the Aggregator

• As an Aggregator, on Rs. 1000/- (800+200); after claiming applicableabatement

Note : Where ‘Discount’ is not reimbursed to the Service Provider - Aggregator liable to

discharge ST on Rs. 800/- (i.e. on the discounted price)

Taxability of ‘penalty’ for deficiency in service

The fare for the service provided is refunded to the customer as ‘Penalty’ for

deficiency in services

Penalty borne solely by the Aggregator

Penalty shared betweenthe Aggregator & ServiceProvider (i.e. a part of the

Penalty borne solely by the Service Provider

Scenario-1 Scenario-2 Scenario-3

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the Aggregator Provider (i.e. a part of thefare paid to Serviceprovider by Aggregator)

the Service Provider

Aggregator to pay tax on the applicable fare (even

though the customer does not pay)

Aggregator to pay servicetax on the amount paid tothe Service Provider

No ST liability

Note : Where ST has been deposited prior to being refunded to the customer - the

excess ST deposited can be adjusted in terms of Rule 6(3) against future service tax liability

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