2024 (10) TMI 194 - AAR - GST

E-commerce Operator as defined in sec 2 (45) of the GST Act or not - service provider or not u/s 9 (5) of the GST Act read with notification no. 17/2021-Central tax(rate) dated 18th November, 2021 for the Driver services provided by the Driver to the Customer connected by Yatri Sathi Mobile App - liability of applicant to collect and pay GST on the services supplied by the Drivers (person who subscribed the app) to the Customers (person who subscribed the app) connected through the App considering the Applicant as service provider u/s 9 (5) of the GST Act read with notification no. 17/2021-Central Tax (Rate) dated 18th November, 2021. Whether the applicant falls under the purview of the E-commerce Operator as defined in section 2 (45) of the GST Act? - HELD THAT - It appears that any person who is an owner or operator of digital or electronic facility or platform or one who manages such platform for supply of goods or services or both, including digital products i.e. a platform which in common parlance is said to be an electronic commerce platform can be said to be an Electronic Commerce Operator. Admittedly, in the instant case, the applicant is the owner of a digital platform namely the Yatri Sathi App and provides supply of services to the drivers by way of allowing the drivers to use the digital platform against a consideration. The applicant thus fits into the definition and qualifies to be an Electronic Commerce Operator in terms of section 2 (45) of the GST Act. Whether the applicant shall be deemed to be the service provider under section 9 (5) of the GST Act read with notification no. 17/2021-Central Tax (Rate) dated 18th November, 2021 for the Driver services provided by the Driver to the Customer connected by Yatri Sathi Mobile App ? - HELD THAT - The first two arms of the conditions as laid down in Section 9 (5) of the GST Act get satisfied, i.e. the instant services are notified by the Government and the supply is intra-state in nature. Now, this issue narrows down to the focal point as to whether this service is supplied through (emphasis added) the electronic commerce operator or not. The word through as referred to in Section 9 (5) of the GST Act is not explained or defined in the relevant context. Hence that requires to be discussed in detail. Whether the applicant shall be liable to collect and pay GST on the services supplied by the Drivers (person who subscribed the app) to the Customers (person who subscribed the app) connected through the App? - HELD THAT - Even though the applicant qualifies to be an electronic commerce operator, the supply of services is not made through him but such supply is independent in nature. Therefore, the applicant, though qualifies the definition of being an e-commerce operator, does not satisfy the conditions of Section 9 (5) of the GST Act for discharging the tax liability by an electronic commerce operator and hence, is not the person liable for discharge of tax liability under section 9 (5) of the GST Act.

Summary

Issues Involved:

1. Whether the applicant falls under the purview of the E-commerce Operator as defined in section 2 (45) of the GST Act.
2. Whether the applicant shall be deemed to be the service provider under section 9 (5) of the GST Act for the Driver services provided through the "Yatri Sathi Mobile App."
3. Whether the applicant is liable to collect and pay GST on the services supplied by the Drivers to the Customers connected through the App.

Issue-wise Detailed Analysis:

1. E-commerce Operator Classification:

The applicant is a society registered under the West Bengal Societies Registration Act, 1961, engaged in developing a ride-hailing platform named "Yatri Sathi Mobile App." The primary question is whether the applicant qualifies as an E-commerce Operator under section 2 (45) of the GST Act. The definition of an E-commerce Operator includes any person who owns, operates, or manages a digital or electronic facility or platform for electronic commerce. The applicant owns and manages the "Yatri Sathi" platform, which connects drivers and customers for transportation services. Despite the applicant's argument that it only facilitates connections and does not engage in the supply of services, the authority concluded that the applicant fits the definition of an E-commerce Operator as it owns and operates the digital platform for electronic commerce.

2. Service Provider under Section 9 (5):

Section 9 (5) of the GST Act mandates that the tax on specified services supplied through an electronic commerce operator shall be paid by the operator as if they are the supplier. The applicant argued that it merely connects drivers and passengers without controlling the actual service provision, thus not qualifying as a service provider under this section. The authority examined the nature of the applicant's role and found that the applicant does not have significant involvement in the processes of booking, payment handling, or ensuring service delivery, which are essential to be considered as supplying services "through" the platform. Consequently, the authority ruled that the supply by the service provider (driver) to his customers (passengers) through the Yatri Sathi App does not amount to supply by the applicant, and thus, the applicant is not deemed to be the service provider under section 9 (5).

3. GST Liability on Services Supplied:

The final issue is whether the applicant is liable to collect and pay GST on services supplied by the drivers to the customers through the App. The authority evaluated the business model, noting that the applicant does not determine fares, collect payments, or exert control over the service quality. The applicant operates on a subscription-based model without charging commission fees, and the drivers are responsible for collecting fares directly from customers. Since the applicant does not satisfy the conditions of Section 9 (5) for discharging tax liability as an electronic commerce operator, it is not liable for GST on the services supplied by the drivers. Therefore, the applicant is not responsible for collecting and paying GST under section 9 (5) of the GST Act.

Conclusion:

The authority ruled that while the applicant qualifies as an E-commerce Operator, it is not deemed to be the service provider under section 9 (5) for the driver services facilitated through its platform. Consequently, the applicant is not liable to collect and pay GST on the services supplied by the drivers to the customers through the App.