Services Covered under section 9(5)
Section 9(5) is not strictly about reverse charge as here the recipient is not liable to pay tax but an electronic commerce operator through whom the supplier provides service to receipt is liable to pay GST. Section 9(5) is reproduced below -
The Government may, on the recommendations of the Council, by notification, specify categories of services the tax on intra-State supplies of which shall be paid by the electronic commerce operator if such services are supplied through it, and all the provisions of this Act shall apply to such electronic commerce operator as if he is the supplier liable for paying the tax in relation to the supply of such services
Provided that where an electronic commerce operator does not have a physical presence in the taxable territory, any person representing such electronic commerce operator for any purpose in the taxable territory shall be liable to pay tax :
Provided further that where an electronic commerce operator does not have a physical presence in the taxable territory and also he does not have a representative in the said territory, such electronic commerce operator shall appoint a person in the taxable territory for the purpose of paying tax and such person shall be liable to pay tax
Practical implications of the section,
Supplier Exemption: In case of notified services, the actual service provider is not required to pay GST if the ECO is liable under Section 9(5).
No TCS under Section 52 is required to be collected by the ECO on such supplies as they are deemed suppliers, not intermediaries.
Input Tax Credit: ECOs discharging liability under Section 9(5) are entitled to input tax credit, subject to other conditions.
Billing Responsibility: Invoice must be issued by the ECO, not by the actual service provider.
Section 9(5) also lays down responsibility in case the ECO is not physically located in India:
- First Proviso: If the ECO does not have a physical presence, any person representing the ECO in India shall be liable to pay tax.
- Second Proviso: If there is no representative either, the ECO is required to appoint a person in India for the purpose of tax compliance. That person shall be deemed liable.
This ensures that foreign ECOs (like Airbnb, Agoda, foreign app aggregators) are brought under the tax net, even if they do not maintain a direct presence in India.
Following is the list of services covered under section 9(5) as per notification no 17/2017-CTR dated 28th June 2017.