2018 (12) TMI 711 - AAAR - GST

Levy of GST - electronic commerce operator or not - money paid by the customer directly to the driver of the cab for the service of the trip - Held that - In the instant case the transportation of passenger service is provided by the taxi drivers by using a software application. Transportation of passengers is a taxable service liable to GST. The provision of this service by the taxi driver to the passenger is a supply within the scope of supply given in Section 7 of the CGST Act since the service is provided for a consideration. The Appellant on the other hand has developed a digital platform which aggregates the taxi drivers on one common platform. The service of transportation of passengers is supplied by the taxi drivers using the digital application developed by the Appellant. The Appellant manages the digital application which facilitates the supply of the service of transportation of passengers. On completion of the service Appellant sends an invoice to the customer through the digital network facility which is payable by the consumer to the taxi driver. Therefore the appellant M/S. OPTA Cabs Pvt Ltd is an electronic commerce operator in terms of the definition given in Section 2(45) of the CGST Act. The argument of the Appellant that the taxi services are merely booked through it and not supplied through it is not a tenable argument. Further, the fact that the ecommerce operator is not receiving the amount from the customer is also not a valid consideration since the e-commerce operator is deemed to have supplied the service in terms of Section 9 (5) read with the notification. Ruling - The services of transportation of passengers supplied through the Appellant s electronic platform and digital network would be liable to tax at the hands of the Appellant.

Summary

Issues Involved:
1. Whether the Appellant is an e-commerce operator under the CGST Act, 2017.
2. Whether GST is leviable on the amounts billed by the Appellant on behalf of the taxi operators for the services provided in the nature of transportation of passengers.
3. Interpretation of Section 9(5) of the CGST Act, 2017 and Notification No. 17/2017 - Central Tax (Rate) dated 28th June 2017.

Issue-wise Detailed Analysis:

1. Whether the Appellant is an e-commerce operator under the CGST Act, 2017:
The Appellant, M/s. OPTA Cabs Pvt. Ltd., operates a taxi aggregation service through an IT platform, connecting customers and taxi drivers. The Appellant argued that it only provides an IT platform service and does not intercede in the service provision by the taxi drivers. According to Section 2(45) of the CGST Act, 2017, an "electronic commerce operator" means any person who owns, operates, or manages a digital or electronic facility or platform for electronic commerce. The Appellate Authority found that the Appellant owns and operates the IT platform for the supply of transportation services over a digital network, thereby qualifying as an "electronic commerce operator."

2. Whether GST is leviable on the amounts billed by the Appellant on behalf of the taxi operators for the services provided in the nature of transportation of passengers:
The Appellant contended that it does not receive any payment from customers, as payments are made directly to the taxi drivers. However, the Appellate Authority noted that under Section 9(5) of the CGST Act, 2017, the liability to pay tax on certain notified services, including transportation of passengers, is shifted to the e-commerce operator. The Appellant's platform facilitates the supply of transportation services, and hence, the Appellant is liable to pay GST on these services, regardless of whether the payment is made directly to the taxi driver or not.

3. Interpretation of Section 9(5) of the CGST Act, 2017 and Notification No. 17/2017 - Central Tax (Rate) dated 28th June 2017:
Section 9(5) of the CGST Act, 2017, states that the Government may specify categories of services for which the tax on intra-State supplies shall be paid by the electronic commerce operator if such services are supplied through it. Notification No. 17/2017 - Central Tax (Rate) dated 28th June 2017 includes transportation of passengers by a radio-taxi, motorcab, maxicab, and motor cycle as such services. The Appellant argued that the services are only "booked" and not "supplied" through its platform. However, the Appellate Authority clarified that the booking of a taxi ride through the Appellant's platform is an integral part of the supply chain, making the Appellant liable for GST under Section 9(5) as if it is the supplier.

Conclusion:
The Appellate Authority upheld the Advance Ruling Authority's decision that the Appellant, as an e-commerce operator, is liable to pay GST on the services of transportation of passengers supplied through its platform. The appeal filed by M/s. OPTA Cabs Pvt. Ltd. was dismissed on all accounts.