Page 251 - Kaleidoscope Academic Conference Proceedings 2024

Innovation and Digital Transformation for a Sustainable World

consumer, location of tangible property location of the for Climate Action.” World Bank and International
consumer, location of tangible property from where the Telecommunication Union, 2024.
activities take place etc. This leads to a pressure on the
domestic customers and international cross-border suppliers. [2] Reuven S Avi-Yonah, “International Tax as
International Law: An Analysis of the International
For illustrative purposes, the eligibility of the framework of Tax Regime,” Cambridge University Press, 2007.
jurisdiction of destination, where the consumer / service
recipient resides in the cases of B2C transactions is [3] National Institute of Standards and Technology, US
ineffective as the GST is not paid by the customer, rather it Department of Commerce, “The NIST Definition of
is paid by the supplier on the basis of their own self- Cloud Computing,” Special Publication pp. 800–
assessment. In the cases wherein the supplier is not based in 145, 2011.
the local jurisdiction of India, the same cannot be completed
under the GST law unless a specific standard regulation for [4] The Organization for Economic Cooperation and
payment under the RCM mechanism is implemented in this Development (OECD), “Model Tax Convention on
regard. Income and on Capital,” Commentary on Article 12
para 12 of the OECD Model, 2017.
10. CONCLUSION AND RECOMMENDATIONS
The detailed independent discussion on indirect taxes [5] RAW Thelosen, “Straight-Through Processing:
provided in the previous section highlights the necessity and Difficulties in Applying the Royalties Article of the
mechanism for standardization of the indirect tax regime in OECD Model,” Bulletin for International Taxation
respect of the ICT solutions for the future. Generally, an (Volume 64), No. 6, 2010.
‘import’ means bringing goods into one country from
another country. As per Customs Act, 1962, IMPORT means [6] Technical Advisory Group on “Treaty
bringing into India from a place outside India. Characterization of Electronic Commerce
Payments,” “Tax Treaty Characterization Issues
India being a signatory to the International Convention on Arising from E-commerce,” Report to Working
the Harmonized Commodity Description and Coding Party No 1 of the OECD Committee on Fiscal
System, 1983 (‘HS Convention’) has adopted the Affairs, 2001.
classification codes and the General Rules of Interpretation
as prescribed under the Convention. The classification of the [7] Lothar Determann, “What Happens in the Cloud:
goods is carried out on the basis of the HS governed by the Software as a Service and Copyrights,” Berkeley
Customs Tariff Act, 1975. The OECD has carried out Technology Law Journal, Vol. 29, No. 2, 2015.
resounding work regarding the classification of the things
such as the digital supplies, including cloud computing [8] Alexandra Bal, “The Sky’s the Limit—Cloud-
transactions, are considered services for GST and customs
purposes. Based Services in an International Perspective”, :
Bulletin for International Taxation, Vol. 68, No. 9,
Despite the clarification regarding the nature of classification 2014.
of various ICT solutions by the OECD, UN as well as the
Harmonic System Nomenclature, the current existing [9] Ibid.
analysis is an oversimplification of the actual ICT solutions
provided by the companies and entities leading to a distortion [10] Marie Lamensch, Edoardo Traversa, and Servaas
in the nature of taxation on the specific activities.[11] This van Thiel, “Value Added Tax and the Digital
leads to a distortion or the wrongful levy of the GST and Economy,” Kluwer Law International 2015.
customs duty on the supply of the ICT solutions which
overlooks the exact correct characterisation of the digital [11] OECD, “Consumption Tax Aspects of Electronic
supplies. Furthermore, the RCM standard for the collection Commerce,” Report from Working Party No 9 on
and disbursement of the revenue to the governments is based Consumption, Taxes to the Committee on Fiscal
on the principle of registration and self-assessment Affairs, 2001.
declaration which is effective with the large scale huge
MNC’s but is not effective with the small-scale local [12] Rifat Azam, “Cloudy with a Chance of Taxation,”
suppliers who still rely on the Forward Charge Mechanisms SMU Dedman School of Law Legal Studies, 22 Fla.
(FCM) basis of taxation and availment of ITC. The proposal Tax Rev. 500, 2019.
of standardization in the form of collection of the tax and
subsequent disbursement by the intermediaries remains to be [13] Hongler, Peter “Blueprints for a New PE Nexus to
explored by the governments across the globe. Tax Business Income in the Era of the Digital
Economy,” WU International Taxation Research,
11. REFERENCES 2015.

[1] World Bank; ITU. “Measuring the Emissions and
Energy Footprint of the ICT Sector: Implications

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