2022 (11) TMI 256 - AAR - GST

Classification of supply - nature of supply - e-commerce operator - Section 9(5) of CGST Act 2017 r/w notification No. 17/2017 dated 28.06.2017 - supply or not - supply by the service provider (person who has subscribed to Applicant's app) to his customers (who also have subscribed to Applicant's app) on the Applicant's computer application - supply of goods or services supplied by the service provider (person who has subscribed to Applicant's app) to his customers (who also have subscribed to Applicant's app) on the Applicant's computer application. 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 (APP MYn), for the supply of goods or services or both. Thus the applicant squarely fits into the definition and qualifies to be an Electronic Commerce Operator. The word through in the phrase services supplied through electronic commerce operator , in Section 9(5) ibid, gives the meaning that the services are to be supplied by means of / by the agency of / from beginning to the end / during entire period by e-commerce operator. In the instant case, it is observed that the applicant, because of their unique business model, merely connects the driver and passenger and their role ends on such connection; they do not collect the consideration; they have no control over actual provision of service by service provider; they do not have the details of the ride; they do not have control room/call centre etc. The supply happens independent of the applicant and the applicant is involved only in the identification of the supplier of services and doesn't take responsibility for the operational and completion of the ride. Thus it is observed that supply of services are not through the electronic commerce operator, but are independent. Therefore, the applicant does not satisfy the conditions of Section 9(5) for the discharge of tax liability by electronic commerce operator. Thus the applicant, though qualifies the definition of being an e-commerce operator, is not the person liable for discharge of tax liability under Section 9(5) of the CGST Act, 2017.

Summary

Issues Involved:
1. Whether the Applicant satisfies the definition of an e-commerce operator under Section 9(5) of the CGST Act 2017 r/w Notification No. 17/2017 dated 28.06.2017.
2. Whether the supply by the service provider to his customers on the Applicant's computer application amounts to supply by the Applicant.
3. Whether the Applicant is liable to collect and pay GST on the supply of goods or services supplied by the service provider to his customers on the Applicant's computer application.

Issue-wise Detailed Analysis:

1. Definition of E-commerce Operator:
The applicant provides computer application services through an APP known as MYn, facilitating business transactions of goods or services between suppliers/sellers and recipients/buyers. The applicant charges membership and subscription fees from users and discharges output tax on these fees. The applicant argued that they are not an e-commerce operator as they do not control the supply or collect consideration for the supply. The authority examined Sections 2(44), 2(45), and 9(5) of the CGST Act 2017, which define "electronic commerce" and "electronic commerce operator." The authority concluded that the applicant qualifies as an e-commerce operator because they own and manage a digital platform for electronic commerce.

2. Supply by Service Provider Amounting to Supply by Applicant:
The applicant's APP allows users to create Business User Accounts and Individual User Accounts. Business users can supply goods or services to individual users, but the applicant does not have any role in the terms and conditions of these business contracts. The applicant is not involved in the supply of goods or services or the collection of consideration. The authority concluded that the supply by the service provider to his customers on the applicant's APP does not amount to supply by the applicant. The applicant's role is limited to providing the APP services and collecting registration and subscription fees.

3. Liability to Collect and Pay GST:
The applicant argued that their liability to pay tax is limited to the registration fee and monthly subscription collected from users. They contended that they are not liable to pay tax under Section 9(5) of the CGST Act 2017 and Notification No. 17/2017-Central Tax (Rate) dated 28.06.2017. The authority examined the conditions under Section 9(5) for an e-commerce operator to be liable for tax: the services must be specified by notification, be intra-state supplies, and be supplied through the e-commerce operator. The authority concluded that the applicant's services do not meet the condition of being supplied through an e-commerce operator, as the applicant merely connects the driver and passenger without controlling the actual provision of service or collecting consideration. Therefore, the applicant is not liable to collect and pay GST on the supply of goods or services by the service provider to his customers on the applicant's APP.

Ruling:
a. The Applicant satisfies the definition of an e-commerce operator but does not meet the conditions of Section 9(5) of the CGST Act 2017 r/w Notification No. 17/2017 dated 28.06.2017 for the discharge of tax liability by an electronic commerce operator.
b. The supply by the service provider to his customers on the Applicant's computer application does not amount to supply by the Applicant.
c. The Applicant is not liable to collect and pay GST on the supply of goods or services by the service provider to his customers on the Applicant's computer application.