2024 (7) TMI 1505 - AAR - GST

Scope of an e-commerce operator - nature of supply as conceptualized in Section 9 (5) of CGST Act, 2017 r/w notification No 17/2017 dated 28.06.2017 - supply by the independent four-wheeler cab service provider (person who has subscribed to Rapido app) to his passengers (who do not pay any subscription feel on the app platform amounts to supply by the Applicant - liability to pay GST on the supply of services provided by the independent four-wheeler cab service provider (person who has subscribed to applicant s Rapido app) to his passengers on the Applicant s app platform - rate at which GST shall be collected on the ride monitoring fee and the SAC code that shall be applicable - liability to pay GST on the supply of services provided by the independent three/two-wheeler cab service provider (person who has subscribed to applicant s Rapido app) to his passengers on the Applicant s app platform. Whether the applicant qualifies to be an e commerce operator or not and whether they are liable to discharge tax liability in terms of Section 9 (5) of the CGST Act 2017? - HELD 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 the applicant owns digital platform ( Rapido APP). for the supply of services. Thus the applicant squarely fits into the definition and qualifies to be an Electronic Commerce Operator. Charging section i.e. Section 9 (5) of the CGST Act 2017 - HELD THAT - In the instant case the services of transportation of passengers are provided by a four-wheel car. which is a motor vehicle adapted to carry maximum four passengers excluding driver and thereby it can carry not more than six passengers excluding the driver and hence qualifies to be a motorcab . Titus the first two conditions viz., (a) and (b) are satisfied in the instant case, in as much as the category of services of Intra-state supplies are notified by the Government covering services by way of transportation of passengers by motor cab. It is apparent that App not only generates leads about customers to the drivers, but also provides a platform for fare negotiation between the customer and driver. Once ride fare is finalized, the location of customer pick up point is shared by the App start of ride, route taken for ride, end of ride are captured and notified to customer by the App. Thus effectively the services of transportation of passenger by the driver is supplied through the Applicant s App/portal from beginning to end and during the entire period of the ride. Thus the condition that the services are supplied through electronic commerce operator is also satisfied. The applicant contends that they are not involved in collection of the consideration pertaining to the ride, on behalf of the driver. The passenger pays the consideration to the driver directly. It is pertinent to mention here that neither the definitions of electronic commerce under Section 2 (44) or electronic commerce operator under Section 2 (45) nor the charging Section 9 (5) of the CGST Act 2017 stipulates that the e-commerce operator has to collect the consideration - Here the supply of such service refers to the supply of services by way of transportation of passengers by a radio-taxi, motorcab, maxicab and motor cycle; as notified vide Notification 17/2017-Central Tax (Rate) dated 28.06.2017 issued under Section 9 (5) of CGST Act, 2017, and supplied through the electronic commerce operator. The applicant is squarely covered in the definition of electronic commerce operator and the supply of services by way of transportation of passengers by a radio-taxi, motorcab, maxicab and motor cycle is supplied through them. Further, by virtue of Section 9 (5) the applicant is liable to pay tax on the supply of the services of transportation of passengers by a radio-taxi, motorcab, maxicab and motor cycle. Thus, three wheeler is covered under Motorcab, i.e, any motor vehicle adapted to carry not more than 6 passengers and two wheeler is covered under Motor Cycle definition. In view of the discussion in para 20 21, the applicant is liable to pay GST on the services supplied through them.

Summary

Issues Involved:
1. Definition of an e-commerce operator and applicability under Section 9(5) of the CGST Act, 2017.
2. Supply by independent four-wheeler cab service providers and its attribution to the applicant.
3. Applicant's liability to pay GST on services provided by independent four-wheeler cab service providers.
4. GST rate and SAC code applicable to the ride monitoring fee.
5. Applicant's liability to pay GST on services provided by independent three/two-wheeler cab service providers.

Detailed Analysis:

1. Definition of an E-commerce Operator and Applicability under Section 9(5) of the CGST Act, 2017:
The applicant operates a digital platform ("Rapido") that connects independent four-wheeler cab service providers with potential passengers. According to Section 2(44) and 2(45) of the CGST Act, 2017, an "electronic commerce operator" (ECO) is any person who owns, operates, or manages a digital or electronic facility for electronic commerce. The applicant qualifies as an ECO because it owns and operates the Rapido app, which facilitates the supply of services. Under Section 9(5) of the CGST Act, the government can specify categories of services for which the tax on intra-state supplies shall be paid by the ECO if such services are supplied through it. The applicant's platform meets this criterion, making it liable for tax as if it were the supplier.

2. Supply by Independent Four-wheeler Cab Service Providers and its Attribution to the Applicant:
The applicant argued that it merely provides a discovery platform and does not control the supply of services. However, the Authority found that the services of transportation of passengers are indeed supplied through the applicant's app. The app facilitates fare negotiation, shares passenger location with drivers, and notifies both parties about the start and end of the ride. Therefore, the supply by the independent four-wheeler cab service provider to his passengers on the Rapido app amounts to supply by the applicant under Section 9(5) of the CGST Act, 2017.

3. Applicant's Liability to Pay GST on Services Provided by Independent Four-wheeler Cab Service Providers:
Under Section 9(5) of the CGST Act, 2017, and Notification No. 17/2017-Central Tax (Rate), the tax on intra-state supplies of services by way of transportation of passengers by a motor cab shall be paid by the ECO. Since the applicant's platform facilitates the entire ride process, from booking to completion, the applicant is liable to pay GST on the supply of services provided by the independent four-wheeler cab service providers.

4. GST Rate and SAC Code Applicable to the Ride Monitoring Fee:
The applicant proposes a pay-per-use ride monitoring fee to ensure passenger safety. This service includes features like number masking, route deviation alerts, and SOS options. The service falls under SAC 9985 (specifically 998522 Security consulting services) and attracts 18% GST (9% CGST and 9% SGST) as per Sl. No. 23(iii) of Notification 11/2017-Central Tax (Rate) dated 28.06.2017.

5. Applicant's Liability to Pay GST on Services Provided by Independent Three/Two-wheeler Cab Service Providers:
Notification No. 17/2017-Central Tax (Rate) also covers services by way of transportation of passengers by a motor cab and motor cycle. The definitions of "motorcab" and "motorcycle" under the Motor Vehicles Act, 1988, include three-wheelers and two-wheelers. Therefore, the applicant is liable to pay GST on the services provided by independent three/two-wheeler cab service providers through its platform.

Ruling:
a. The applicant satisfies the definition of an e-commerce operator and the nature of supply as conceptualized in Section 9(5) of the CGST Act, 2017, read with Notification No. 17/2017 dated 28.06.2017.

b. The supply by the independent four-wheeler cab service provider to his passengers on the Rapido app amounts to supply by the applicant by virtue of Section 9(5) of the CGST Act, 2017.

c. The applicant is liable to pay GST on the supply of services provided by the independent four-wheeler cab service provider to his passengers on the applicant's app platform, being an e-commerce operator, in terms of Section 9(5) of the CGST Act, 2017, read with relevant CGST Rules, 2017.

d. 18% GST (9% CGST and 9% SGST) is applicable on the ride monitoring fee, and SAC code 9985 is applicable for the said service.

e. The applicant is liable to pay GST on the supply of services provided by the independent three/two-wheeler cab service provider to his passengers on the applicant's app platform.