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2024 (6) TMI 9 - AAR - GSTE-commerce operator or not - nature of supply as in Section 9 (5) of CGST Act, 2017 w.r.to N/N. 17/2017 dated 28.06.2017 - Scope of supply - supplies offered over the mobile based digital platform Vyavshay owned and managed by the applicant falls under the ambit of Section 9 (5) of CGST Act, 2017 w.r.t N/N. 17/2017. Qualification as an Electronic Commerce Operator - HELD THAT - From the bare reading of the definitions of e-commerce and e-commerce operator it could be inferred that Electronic Commerce Operator (ECO) means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce i.e. for the supply of goods or services or both, including digital products over digital or electronic network. In the instant case, as observed from the facts on record, the applicant owns and manages digital platform ( Vyvashay APP), for the supply of services. The Partners or Service providers register the details of services to be provided by them including name, address, geo-location etc., on the said platform - the applicant facilitates the partner / service provider in supplying their service to the end user making use of the App maintained by them and enables the user to get to the door step service. Hence, the applicant squarely fits into the definition and qualifies to be an Electronic Commerce operator. Applicability of Section 9 (5) of CGST Act, 2017 to supplies offered over said mobile based digital platform Vyavshay owned and managed by the applicant - HELD THAT - The Government relaxes the provisions of GST law for certain category of service providers with turnover less than threshold limit, from obtaining compulsory registration under Section 24 (ix). Also, the Government shifts the liability to pay tax to the Electronic Commerce Operator from the Service providers, for such category of Services notified under Section 9 (5) of the Central Goods and Services Tax Act, 2017. Section 9 (5) of the Act of 2017 creates a statutory obligation on the E-Commerce Operator as the deemed supplier of the services received by the consumer through the online platform facilitated by the E-Commerce Operator. Hence, the electronic commerce operator for the purpose of Section 9 (5) of the Act 2017 are entities, which are liable to pay tax on the supplies made by other individual suppliers, utilizing the app maintained by the applicant, for the notified services subject to the conditions imposed, thereon. The fact that the ecommerce operator is not receiving the amount from the service recipients is also not a valid argument since as already stated above, the e-commerce operator is deemed to have supplied the service in terms of Section 9 (5) read with the notification above. It is not relevant whether the consideration is paid to the e-commerce operator or to the service provider, as unlike the provisions of Section 52 (1) which mandates that TCS is to be collected on the net taxable value of such supplies in respect of which the ECO collects the consideration, the provisions of Section 9 (5) of the CGST Act, 2017 / SGST Act, 2017 provide that in case of services notified under Sec. 9 (5) of the CGST Act, 2017, tax shall be paid by the electronic commerce operator if such services are supplied through it and all the provisions of the Act shall apply to such electronic commerce operator as if he is the supplier liable to pay tax in relation to the supply of such services. In this case, the applicant facilitates the supply flow from the supplier to the customer and the applicant takes responsibility on such supplies carried through their App and specifically excludes themselves from any responsibility if there is any off line supply takes place between the supplier and customer - the treatment of tax is different for the same supplies when made through E-commerce Operator. The applicant squarely falls under the ambit of Section 9 (5) of the CGST Act 2017/ TNGST Act 2017 w.r.to notification no. 17/2017 dated 28.06.2017. Hence, with regard to the segment of transaction on which the applicant is liable to pay tax it is found that the applicant has to pay tax on the amount charged by the applicant towards the usage of the app as well as on the transaction value as sole consideration in terms of Section 15 of the Act, paid by the users towards receipt of supply of notified services under the Notification No.17/2017-Central Tax (Rate) dated 28.06.2017, as amended, as the applicant, being an ecommerce operator, is deemed to be the supplier of services as per the provisions of Section 9 (5) of the CGST Act, 2017, and the applicant is liable to pay GST only on the transaction between the applicant and the partners i.e based on usage of the app with respect to supply of services other than which are notified under Section 9 (5) of CGST Act, 2017.
Issues Involved:
1. Whether the applicant satisfies the definition of an e-commerce operator. 2. Whether the supplies offered over the applicant's platform fall under the ambit of Section 9 (5) of CGST Act, 2017. 3. On which segment of the transaction would the applicant be liable to pay and collect tax. Summary: Issue 1: Definition of E-Commerce Operator The applicant, through its mobile-based digital platform "Vyavshay," connects service providers (partners) with consumers. The platform allows users to book services such as farm equipment, transportation, and skill-based services. The applicant does not take responsibility for the quality or completion of services but charges partners based on app usage. The applicant qualifies as an "Electronic Commerce Operator" (ECO) as per Section 2 (45) of the CGST Act, 2017 because it owns and manages the digital platform facilitating the supply of services. Issue 2: Applicability of Section 9 (5) of CGST Act, 2017 The applicant argued that they do not fulfill the conditions of being an ECO under Section 9 (5) because the supply of services is not carried on or concluded through their app. However, the ruling clarified that the applicant's platform facilitates the entire service process, from booking to feedback. The applicant retains certain responsibilities and control over the transactions made through the app, thus falling under the ambit of Section 9 (5). The Government's intent, as per Notification No. 17/2017, is to shift the tax liability from small service providers to ECOs to ease compliance burdens. Issue 3: Tax Liability Segments The applicant is liable to pay GST on two segments: 1. The amount charged by the applicant towards the usage of the app. 2. The transaction value paid by users for the receipt of notified services under Notification No. 17/2017. The applicant is deemed to be the supplier of services as per Section 9 (5) of the CGST Act, 2017. For services not notified under Section 9 (5), the applicant is liable to pay GST only on the transaction between the applicant and the partners based on app usage. Ruling: 1. The applicant satisfies the definition of an e-commerce operator and falls under the nature of supply provided in Section 9 (5) of CGST Act, 2017 r/w notification No 17/2017 dated 28.06.2017. 2. The applicant is liable to pay GST on the amount charged for app usage and the transaction value for notified services. For other services, GST liability is limited to the transaction between the applicant and the partners based on app usage.
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