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CA Final · Indirect Tax Laws · Electronic Commerce Transactions

Orbit Stays Ltd is a foreign electronic commerce operator with no physical presence and no representative in India. The Government has notified accommodation services supplied through electronic commerce operators for tax payment by the operator under section 9(5). Orbit's platform facilitates intra-State accommodation supplies in Goa. Which of the following follows from the second proviso to section 9(5) and section 24?

Orbit must appoint a person in the taxable territory to pay the tax, and that person is liable to pay it, as the second proviso to section 9(5) provides. Persons required to pay tax under section 9(5) must also be registered under section 24(iv).

  1. AOrbit is exempt from payment since it has no presence; the hotels pay the tax
  2. BOrbit must appoint a person in the taxable territory for paying tax, and that person is liable to pay the tax; and persons required to pay tax under section 9(5) must be registeredCorrect
  3. CThe tax is paid by the guests under reverse charge, and Orbit need not register
  4. DOrbit may pay tax only after the hotels file their returns, and registration is optional

Explanation

The second proviso to section 9(5) says an operator with no physical presence and no representative must appoint a person in the taxable territory for the purpose of paying tax, and that person is liable to pay it. Section 24(iv) makes persons required to pay tax under section 9(5) compulsorily registrable. Option A is wrong because absence of presence does not remove liability.

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