2019 (10) TMI 616 - AAR - GST

Liability of GST - supply of services by another person through the e-commerce platform operated by the applicant - GST Act, 2017 - providing drivers to the consumers - HELD THAT - The applicant is only acting as an intermediary through the e-commerce platform, wherein the consumers who are in need of drivers would log in to the portal and select the driver. The drivers are listed in the e-commerce platform and the contract is between the drivers and the consumers, with the applicant acting as a facilitator. In some cases, the consideration for this service is received by the applicant on behalf of the drivers and the same would be paid to the drivers. Hence the applicant is not providing drivers to the consumers but only facilitating the consumers and drivers to come together for provision of service. The supplier of services is the e-commerce platform service provider - HELD THAT - The applicant in the instant case and the recipient of the supply of service is the driver as he is the person liable to pay the consideration. The applicant is collecting service charges for the usage of electronic commerce platform like listing services, payment collection etc. and the applicant has admitted GST liability on the above service charges collected and declaring the same in the returns - This turnover is not subject matter of this application for advance ruling and hence not considered. Applicant is operating an electronic commerce platform and is providing a platform for the obtaining the services of drivers by the consumers - HELD THAT - The drivers are the suppliers of services which are separate supplies and the treatment of the taxability of this transaction is not a subject matter of the advance ruling - However, it is pertinent to note that section 9(5) of the CGST Act 2017 does not shift the liability of these services provided by the drivers from the drivers themselves to the e-commerce operator. The applicant is not liable to pay tax for the supply of services by drivers through the e-commerce platform operated by the applicant, but he is liable to pay tax on the services provided to the drivers. Further, the applicant is liable to collect tax under section 52 on the net value of taxable supplies made by the drivers through it where the consideration with respect to such supplies is to be collected by the applicant.

Summary

Issues Involved:
1. Liability to pay tax for supply of services by drivers through the e-commerce platform.
2. Applicability of tax collection at source (TCS) under section 52 of the CGST Act, 2017.

Issue-wise Detailed Analysis:

1. Liability to Pay Tax for Supply of Services by Drivers through the E-commerce Platform:

The applicant, a private limited company, operates an electronic platform "DriveU" to connect drivers and customers. The drivers are independent service providers, not employees of the applicant. The applicant facilitates the provision of driving services but does not directly provide these services. The drivers and customers enter into a direct agreement, with the applicant acting merely as an intermediary.

The applicant's business model involves three supplies:
- First Supply: Facilitating the connection between drivers and consumers via the e-commerce platform. The applicant does not provide drivers but facilitates the service.
- Second Supply: E-commerce services provided to drivers, for which the applicant charges a convenience fee, including GST.
- Third Supply: Manpower services provided by drivers to consumers, with the applicant facilitating payment collection.

The applicant contends that the services provided by drivers do not fall under the categories notified under section 9(5) of the CGST Act, 2017. Therefore, the applicant is not liable to pay GST on these services. The services by drivers are not among those notified under Notification No. 17/2017 - Central Tax (Rate), which includes services like transportation of passengers by radio-taxi, accommodation services, and housekeeping services.

The judgment confirms that the applicant is not liable for GST on the services provided by drivers through the platform, as these services are not covered under section 9(5) of the CGST Act. The drivers are independent service providers, and the tax liability remains with them.

2. Applicability of Tax Collection at Source (TCS) under Section 52 of the CGST Act, 2017:

The applicant's business model involves collecting payments from customers on behalf of drivers. Section 52 of the CGST Act mandates e-commerce operators to collect tax at source on the net value of taxable supplies made through their platform, where the consideration is collected by the operator.

The judgment notes that the applicant is required to collect tax at source under section 52 on the value of services provided by drivers when the consideration is collected by the applicant. This provision came into force on 1st October 2018. The collected tax is eligible for credit in the electronic credit ledger of the third-party suppliers (drivers), who remain responsible for their tax liabilities.

Ruling:

The applicant is not liable to pay tax for the supply of services by drivers through the e-commerce platform but is liable to pay tax on the services provided to the drivers. Additionally, the applicant must collect tax under section 52 on the net value of taxable supplies made by the drivers through the platform where the consideration is collected by the applicant.