Services Specified Under Section 9(5) of the CGST Act
The Central Goods and Services Tax (CGST) Act, 2017, introduced a unique provision under Section 9(5) that shifts the responsibility of tax payment from the actual service provider to the electronic commerce operator (ECO) facilitating the service. This mechanism ensures efficient tax collection in the rapidly expanding digital economy.
What is Section 9(5) of the
CGST Act?
Section 9(5) empowers the government, on the recommendations of the GST Council, to notify specific categories of services where the tax on intra-state supplies shall be paid by the ECO if such services are supplied through it. In such cases, the ECO is deemed to be the supplier liable for paying the tax. This provision primarily targets services delivered through digital platforms, ensuring that tax liabilities are effectively managed in the e-commerce ecosystem.
Services Notified Under
Section 9(5)
The government has specified certain services under this section, making
ECOs responsible for GST payments when these services are provided through
their platforms:
1. Passenger Transportation Services
·
Description: Services by way of
transportation of passengers by radio-taxi, motorcab, maxicab, motorcycle, omnibus,
or any other motor vehicle.
·
Example: Platforms like Uber
and Ola fall under this category.
·
Notification Reference:
Notification No. 17/2017-Central Tax (Rate) dated 28th June 2017.
2. Accommodation Services
·
Description: Services by way of
providing accommodation in hotels, inns, guest houses, clubs, campsites, or
other commercial places meant for residential or lodging purposes, except where
the person supplying such service through the ECO is liable for registration under
Section 22(1) of the CGST Act.
·
Example: Platforms like OYO and
Airbnb are examples.
·
Notification Reference:
Notification No. 17/2017-Central Tax (Rate) dated 28th June 2017.
3. Housekeeping Services
·
Description: Services such as
plumbing, carpentering, etc., except where the person supplying such service
through the ECO is liable for registration under Section 22(1) of the CGST Act.
·
Example: Platforms like
UrbanClap (now Urban Company) are relevant here.
·
Notification Reference:
Notification No. 23/2017-Central Tax (Rate) dated 22nd August 2017.
4. Restaurant Services
·
Description: Supply of
restaurant services other than those supplied by restaurants located at
specified premises (i.e., premises providing hotel accommodation service having
declared tariff above ₹7,500 per unit per day).
·
Example: This includes cloud
kitchens and food delivery platforms like Swiggy and Zomato.
·
Notification Reference:
Notification No. 17/2021-Central Tax (Rate) dated 18th November 2021.
Tax Liability and Compliance
for ECOs
When services specified under Section 9(5) are supplied through an ECOs
·
Tax Payment: The ECO is liable
to pay GST on such supplies as if it is the supplier.
·
Input Tax Credit (ITC): ECOs
cannot utilize ITC to discharge their tax liability under Section 9(5); the tax
must be paid in cash. However, they are not required to reverse ITC availed on
inputs and input services used for other taxable supplies.
·
Invoicing: The ECO must issue
invoices for the supplies on which it is liable to pay tax under Section 9(5).
·
Return Filing: ECOs must report
such supplies in Table 3.1.1(i) of GSTR-3B. The actual service providers should
report these supplies in Table 3.1.1(ii) of GSTR-3B.
Implications for Service
Providers
For service providers supplying through ECOs:
·
Registration: If the service
provider's aggregate turnover exceeds the threshold limit, they must register
under GST.
·
Tax Liability: They are not
liable to pay GST on services notified under Section 9(5) when supplied through
an ECO; the ECO bears this responsibility.
·
Reporting: They should report
such supplies in their GSTR-3B returns as specified.
Comprehensive Table:
Services Notified Under Section 9(5)
|
Service Category |
Description |
ECO Examples |
Notification Reference |
|
Passenger Transportation Services |
Transport of passengers by radio-taxi, motorcab, maxicab,
motorcycle, omnibus, or any other motor vehicle |
Uber, Ola |
Notification No. 17/2017-Central Tax (Rate) dated 28th
June 2017 |
|
Accommodation Services |
Providing accommodation in hotels, inns, guest houses,
clubs, campsites, etc., except where supplier is liable for registration
under Section 22(1) |
OYO, Airbnb |
Notification No. 17/2017-Central Tax (Rate) dated 28th
June 2017 |
|
Housekeeping Services |
Services such as plumbing, carpentering, etc., except
where supplier is liable for registration under Section 22(1) |
UrbanClap (Urban Company) |
Notification No. 23/2017-Central Tax (Rate) dated 22nd
August 2017 |
|
Restaurant Services |
Supply of restaurant services other than those supplied by
restaurants located at specified premises |
Swiggy, Zomato |
Notification No. 17/2021-Central Tax (Rate) dated 18th
November 2021 |