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CMA Intermediate · Direct and Indirect Taxation · Charge of Tax including Reverse Charge

A foreign electronic commerce operator has no physical presence in the taxable territory and no representative there. A notified service supplied through it is liable to tax under Section 9(5) of the CGST Act, 2017. Who is liable to pay the tax?

The person whom the foreign electronic commerce operator appoints in the taxable territory is liable to pay the tax. The second proviso to Section 9(5) requires such an appointment where the operator has neither physical presence nor a representative, so liability does not lapse.

  1. AThe recipient of the service, under Section 9(3)
  2. BThe person whom the operator appoints in the taxable territory for paying taxCorrect
  3. CNo one, as there is no physical presence
  4. DThe supplier alone, in every case

Explanation

The second proviso to Section 9(5) requires an operator with no physical presence and no representative in the taxable territory to appoint a person there for paying tax, and that person is liable to pay tax. Absence of physical presence does not remove liability.

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