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Accommodation Service through E-Commerce Portals
Facts
Mr. Jignesh of Delhi books accommodation, though an e-commerce operator - Plan My Trip Ltd. (PMTL), registered under GST in Uttarakhand, in a newly established budget hotel – Paras Resorts Ltd. (PRL) located in Nainital, Uttarakhand. The turnover of PRL in the current financial year is Rs. 18 lakh.
PRL raises an invoice for Rs. 1,00,000 to Mr. Jignesh. PMTL collects the payment from Mr. Jignesh and after deducting its fees and other charges from the same, remits the balance amount to PRL.
Question-1: Since PRL is providing accommodation service through E-Commerce Portal, Is it mandatory for getting GST Registration even if its Aggregate Supply is less than threshold limit.
a) Yes
b) No
Answer: No (Explanation is given at the end of the article).
Question-2: Whether PMTL (E-Commerce Portal) needs to discharge GST on such Accommodation Service?
a) Yes, (IGST)
b) Yes (CGST & SGST)
b) No
Answer: Yes (CGST & SGST) (Explanation is given at the end of the article).
Question-3: Whether PMTL is required to deduct TCS under Section-52.
a) Yes
b) No
Answer: No (Explanation is given at the end of the article).
Facts (Amended)
If PRL, supplying accommodation services, is also an e-commerce operator (registered in Uttarakhand as TCS collector as well as a regular tax payer since its aggregate turnover exceeds the threshold limit) and PMTL has an agreement with PRL for booking the accommodation at the time.
Question-4: In this case, who is required to pay GST on Accommodation Service
a) PRL (CGST & SGST)
b) PRL (IGST)
c) PMTL (IGST)
d) PMTL (CGST & SGST)
Answer: PRL (CGST & SGST) (Explanation is given at the end of the article).
Question-5: If PRL is not registered as E-Commerce operator but simply as Hotel Accommodation Service Provider. Who will be required to pay GST.
a) PRL (CGST & SGST)
b) PRL (IGST)
c) PMTL (IGST)
d) PMTL (CGST & SGST)
Answer: PRL (CGST & SGST) (Explanation is given at the end of the article).
Question-6: In this case as both are registered as Electronic Commerce Operator and also Registered for TCS under Section-52, who will be required to collect TCS
a) PRL
b) PMTL
Answer: PMTL (Explanation is given at the end of the article).
Explanation
Original Facts
Registration Issue
As per section 22, every supplier of goods or services or both is required to obtain registration in the State/ Union territory from where he makes the taxable supply if his aggregate turnover exceeds threshold limit in a financial year.
However, section 24, inter alia, provides that persons who supply goods or services or both through an electronic commerce operator (hereinafter referred as ECO), who is required to collect tax at source under section 52, are required to obtain registration mandatorily.
However, said mandatory registration is not applicable, inter alia, to the suppliers of the services which are notified under section 9(5) of CGST Act or section 5(5) of the IGST Act, 2017; such suppliers are entitled for threshold exemption.
Under Section-9(5) of CGST Act or Section 5(5) of IGST Act, some of the services have been notified (N.No. 14/2017 as amended) where instead of Actual Supplier of Service, Electronic Commerce Operator needs to discharge GST.
One of such service which is notified under Section 9(5) is
Accommodation Service by the Un-Registered Person (whose turnover is less than threshold limit).
In above case, since PRL has turnover less than threshold limit and its service has been notified under Section 9(5), it is not required to take registration under Section-24.
TCS
As per Section-52, where ECO has been required to pay GST for the services notified under Section 9(5) of CGST Act or 5(5) of IGST Act, he is not required to collect TCS.
Payment of GST
As service is notified under Section 9(5), Electronic Commerce Operator (ECO) needs to discharge GST on behalf of Supplier.
Further, in case of hotel accommodation service, Place of Supply of Service is the place of Hotel, PMTL needs to pay GST as CGST & SGST. (Please also read Part-3 of RTP for more details on Place of Supply in case of Accommodation Service).
Amended Facts
Payment of GST
Since in this case, PRL is registered under GST Act, Accommodation Service provided by him is no more covered under Section 9(5).
Accordingly, he is required to discharge GST.
TCS
In a situation where multiple ECOs are involved in a single transaction of supply of goods or services or both through ECO platform and the supplier-side ECO is himself the supplier of the said supply, Circular No. 194/06/2023 GST dated 17.07.2023 clarifies that the buyer-side ECO will be required to collect TCS, as applicable, pay the same to the Government in accordance with section 52 and also make other compliances under said section.
In this case, Buyer side ECO is PMTL who is dealing with the Buyer of the Accommodation Service i.e. Jignesh. Accordingly it is required to collect TCS @ 0.5% each (CGST & SGST).
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Disclaimer: We have taken due care to the best of our knowledge while explaining the provisions surrounding the issue purely for informational/academic purpose. It should not be considered as professional advice or consultancy to be relied upon. While due care has been taken by Fab Gyan in preparing this article, certain mistakes and omissions may creep in. The Fab Gyan or its Author does not accept any liability for any loss or damage of any kind arising out of any inaccurate or incomplete information in this document nor for any actions taken in reliance thereon.
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