2023 (9) TMI 1121 - AAR - GST

E-commerce operator or not - 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 service provider (person who has subscribed to Namma yatri) to his customers (who also have subscribed to Namma yatri) on the Applicant s computer application - supply or not - liability to collect and pay GST on the supply of services supplied by the service provider (person who has subscribed to Namma Yatri) to his customers (who also have subscribed to Namma Yatri) on the Applicant s computer application. HELD THAT - It could be inferred from the definitions 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 ( Namma Yatri APP), for the supply of services. Thus the applicant squarely fits into the definition and qualifies to be an Electronic Commerce Operator. Vide Notification 17/2017-Central Tax(Rate) dated 28.06.2017, issued under Section 9(5) of the CGST Act, 2017, Government has notified that tax on intra-state supplies for (i) services by way of transportation of passengers by a radio-taxi, motorcab, maxicab and motor cycle; shall be paid by the electronic commerce operator. Further explanation (b) to the said notification specifies that maxicab , motorcab , and motor cycle shall have the same meaning as assigned to them respectively in clauses (22), (25) and (26) of Section 2 of the Motor Vehicles Act, 1988 - In the instant case the services of transportation of passengers are provided by an auto rickshaw, which is a motor vehicle adapted to carry maximum three passengers excluding driver and thereby it can carry not more than six passengers excluding the driver and hence qualifies to be a motorcab . Thus 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. In the instant case, it is observed that the applicant, because of their unique business model, merely connects the auto 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. Definition of an e-commerce operator under Section 9(5) of CGST Act, 2017.
2. Whether the supply by the service provider on the Applicant's application amounts to supply by the Applicant.
3. Liability of the Applicant to collect and pay GST on services supplied by the service provider through the Applicant's application.

Summary:

Issue 1: Definition of an e-commerce operator

The applicant, engaged in providing technology services through the "Namma Yatri" app, sought clarity on whether they qualify as an e-commerce operator under Section 9(5) of the CGST Act, 2017. The Authority examined the definitions under Sections 2(44) and 2(45) of the CGST Act and concluded that the applicant, owning and managing the digital platform for the supply of services, fits the definition of an Electronic Commerce Operator (ECO).

Issue 2: Supply by the service provider on the Applicant's application

The applicant argued that their role is limited to providing a platform for auto drivers and passengers to connect, without involvement in the actual supply of services. The Authority reviewed the "Driver's Terms and Conditions" and found that the applicant does not participate in the business transactions between the auto drivers and passengers. Consequently, the supply by the service provider to their customers on the applicant's application does not amount to supply by the applicant.

Issue 3: Liability to collect and pay GST

The applicant contended that they should not be liable to collect and pay GST on the services supplied by the auto drivers through their app, as they do not control the fare, collection, or completion of the ride. The Authority considered the provisions of Section 9(5) of the CGST Act and Notification No. 17/2017-Central Tax (Rate) dated 28.06.2017. It was determined that the applicant's role is limited to connecting the service provider and recipient, without involvement in the actual supply of services. Therefore, the applicant is not liable to collect and pay GST on the services supplied by the service provider through their application.

Ruling:

a. The Applicant satisfies the definition of an e-commerce operator but not the nature of supply as conceptualized in Section 9(5) of CGST Act, 2017 r/w notification No 17/2017 dated 28.06.2017.

b. The supply by the service provider (person who has subscribed to Namma Yatri) to his customers (who also have subscribed to Namma Yatri) 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 services supplied by the service provider (person who has subscribed to Namma Yatri) to his customers (who also have subscribed to Namma Yatri) on the Applicant's computer application.