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CA Final · Indirect Tax Laws · Electronic Commerce Transactions

Skyline Stays Inc, an e-commerce operator based outside India, has no physical presence and no representative in the taxable territory. The Central Government has notified services supplied through it under section 9(5). Which of the following is correct under the provisos to section 9(5) and section 24?

Skyline Stays must appoint a person in the taxable territory to pay tax, and that person becomes liable to pay the tax. Under the second proviso to section 9(5), the obligation does not fall on the supplier or recipient. Section 24(iv) also requires registration of persons liable under section 9(5).

  1. AIt must appoint a person in the taxable territory for the purpose of paying tax, and such person is liable to pay tax; the persons required to pay tax under section 9(5) must be registeredCorrect
  2. BTax is payable by the supplier of the services alone, as the operator has no presence in India
  3. CThe Government itself must appoint a representative for the operator, and registration is optional
  4. DTax is payable by the recipient of the services under reverse charge, who need not be registered

Explanation

The second proviso to section 9(5) says that an operator without physical presence and without a representative in the taxable territory shall appoint a person in the taxable territory for paying tax, and that person is liable to pay tax. Section 24(iv) makes persons required to pay tax under section 9(5) liable to compulsory registration. The other options contradict these provisions.

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