By Rohit Jain and Rahul Khurana Identified as one of the fastest growing sectors, \u201ce-commerce\u201d has been receiving special attention from various Ministries of the Government of India, including the Ministry of Finance (MoF). In the run-up to GST, which recently saw the release of the Model GST law, expectedly, the e-commerce sector has again received special attention in as much as specific provisions have been devoted (in the Model GST law) to e-commerce companies, which seems to depart from the current position as well as appears to be an exception to the general principles underlying GST, viz. tax on consumption. The following provisions under the Model GST law qua e-commerce merit consideration: Persons who supply goods and\/or services, other than branded services, through e-commerce operators, as also every e-commerce operator, will be mandatorily required to obtain registration, irrespective of the threshold limit The Model GST law defines the term \u201celectronic commerce operator\u201d to include any person who directly or indirectly owns, operates or manages an electronic platform that is engaged in facilitating the supply of any goods and \/ or services or in providing any information or any other services incidental to or in connection therewith. An electronic commerce operator will be required to collect tax at prescribed rates from the amount payable or paid to the supplier, towards the supply of goods and \/or services made through the said operator, and pay the said tax to the credit of the appropriate Government within ten days after the end of the month in which such collection is made. The amount of tax so collected and paid by the electronic commerce operator will be deemed to be a payment of tax on behalf of the concerned supplier, and the supplier will claim credit of the same in his electronic cash ledger. The E-commerce operator would furnish a statement electronically, containing all prescribed particulars of amounts collected towards outward supplies of goods and \/ or services effected by the said operator, within ten days after the end of such calendar month. The provisions in the Model GST law qua e-commerce, are set to mark a departure from the current law. While GST is expected to carry a lot of positives by ending the confusion surrounding the levy of GST on e-commerce transactions, and subsuming Entry Tax and Local Body Tax (LBT) etc. \u2013 one of the most litigious issues for e-commerce sector \u2013 the negative impacts of GST are more rigorous, particularly from the perspective of administrative compliance. Also track: LIVE: GST Bill set to get a nod in Rajya Sabha today With respect to the mandatory registration irrespective of the threshold, one way to look at this requirement is that it may not have a larger impact as the standard threshold limit for registration (viz. Rs 9 lakh, except for North Eastern States where it will be Rs 4 lakh) is in any case low. However, this may cause additional hardship for small traders who supply goods and\/or services, other than branded services, through e-commerce operators. Further, for some startups whose turnover are not expected to rise above the standard threshold in the initial years, the standard threshold would have provided some relief. Instead, the proposed provision is in contradiction with the \u201cEase of Doing Business\u201d initiative of the Government of India. It is noteworthy that e-commerce companies sell across all states in India dealing with thousands of vendors. GST, being a consumer-based taxation regime, GST is to be paid in the State where the goods or services are consumed. This will lead to huge complexities in record keeping, accounting, and compliance (returns etc.). With respect to collection of tax at prescribed rates from the amount payable or paid to the supplier, what is to be seen is that the rate at which tax is required to be collected at source should be benign, to ensure that there is no pile-up of unutilized credit in the hands of the suppliers. Further, in case of sales returns, which is common in the e-commerce sector, the treatment of tax already collected by the operator remains unaddressed. The provision for tax collection also brings in cash flows issues for small e-commerce companies and sellers. Also read: What is GST? Here's a 10 point simple guide on Goods and Services Tax Further, given the quantum of transactions most e-commerce companies deal in, uploading every invoice within the system, coupled a with a deadline of ten days for filling all information sought, does not seem to be realistic and will bring in administrative unrest in the sector. As mentioned above, the e-commerce sector has attracted a lot of start-ups which mostly do not operate with huge manpower at the initial stages or are constrained to hire additional manpower due to limited revenue flows. Procedural complexities of this nature will end up putting an additional burden on these start-ups, thereby directly impacting the initiatives of the Government of India such as Start up India, Skill India and Make in India, Ease of doing business in India etc. Further, an agency relationship is proposed to be treated as a \u201csupply\u201d under the Model GST law. Therefore, the e-commerce companies may be covered within its sphere where such e-commerce company stocks goods and sells the same to the end consumer on behalf of the seller. Also read: Here\u2019s how GST would change the way India does business Therefore, it is high time that e-commerce companies should bring these complexities to the notice of the Government of India so that the same can be addressed at the appropriate time. While in a recent interview, West Bengal Finance Minister and Chairman of GST Panel, Mr. Amit Mitra mentioned that the dual control of Centre & States under proposed GST regime will apply only to businesses with revenue above Rs. 1.5 crore, this still remains an open issue until the GST legislation is finally introduced. It needs to be seen how the present growth of the e-commerce sector will be maintained by the Government. Disclaimer from authors: This article has been authored by Rohit Jain, who is a Partner and Rahul Khurana, who is a Senior Associate at Economic Laws Practice (ELP), Advocates & Solicitors. The information provided in the article is intended for informational purposes only and does not constitute legal opinion or advice. Readers are requested to seek formal legal advice prior to acting upon any of the information provided herein.