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CA Final · Indirect Tax Laws · Electronic Commerce Transactions

Under section 9(5) of the CGST Act, the Government may notify categories of services on which tax is payable by the electronic commerce operator. Vistara Rides Inc., a foreign operator of a taxi-booking app, has no physical presence and no representative in India, but supplies notified services through its app in India. What does the Act require?

The foreign operator must appoint a person in the taxable territory for the purpose of paying tax, and that person becomes liable to pay the tax. This follows from the second proviso to section 9(5), which applies when the operator has neither a physical presence nor a representative in India.

  1. AThe drivers supplying the services must pay tax, and the operator has no obligation
  2. BThe Government collects tax directly from customers
  3. CVistara must appoint a person in the taxable territory for the purpose of paying tax, and that person is liable to pay taxCorrect
  4. DTax is payable by the foreign operator only after it sets up a branch in India

Explanation

The second proviso to section 9(5) states that where an operator has no physical presence and no representative in the taxable territory, it shall appoint a person in the taxable territory for paying tax, and that person is liable to pay tax. The Act does not require a branch to be set up.

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