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TMI Blog2021 (4) TMI 509X X X X Extracts X X X X X X X X Extracts X X X X ..... ied in conjunction with each other, in the ordinary course of business, one of which is a principal supply. In the instant case, we observe that the applicant is providing two taxable services, i.e. providing an online platform and insurance coverage to the passenger. It is an admitted fact that the insurance coverage to the passenger is optional and also online platform service is neither related to nor ancillary to insurance service. Thus these two supplies are not naturally bundled. Further the said supplies are not in conjunction with each other, in the ordinary course of business. Therefore, we conclude that the activities performed by the applicant do not amount to a composite supply. Whether the pick-up charges paid to the owner / driver fall under GST rate of 5%? - HELD THAT:- The driver need to pick up the passenger before starting of the radio taxi service and hence the pick-up service is incidental to the main service of transportation of passengers by the drivers. The applicant has been made liable for paying the tax in respect of the said service through the e-commerce platform, as if the applicant is the supplier of such service, in terms of Section 9 (5) of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tion No. 11/2017- Central Tax (Rate) dated 28.06.2017. Whether the charges for cancelling the trip for any reason attract GST liability? - HELD THAT:- The applicant has submitted that cancellation charges collected from the passengers may be shared with the owners or drivers. The activity of tolerating the cancellation by the applicant for a consideration is supply of service by virtue of clause (e) of para 5 of Schedule II of CGST Act, 2017 and attracts GST at 18 %. Whether the charges for insurance come under composite supply? - HELD THAT:- It is observed from the terms and conditions that passengers are covered under appropriate insurance against accidents, that the passenger has to opt and give his/her specific consent for the insurance coverage, at the time of booking the ride/trip - thus, its optional on the part of passenger to avail insurance on the trip and the same will not fall under composite supply. If the principal supplier / applicant collects GST, say at 5% along with fare from passengers (as mentioned in the Table submitted by the applicant), does it amount compliance of the GST Rules? - HELD THAT:- 5% GST is only applicable on basic fare. The applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ervice charges, attract GST and if so at what rate? g. Do the charges for cancelling the trip for any reason attract GST liability? h. Do the charges for insurance come under composite supply? i. If the Principal supplier/ Applicant collects GST, say at 5% along with fare from Passengers (please see table above) and remits that amount, does it amount to compliance of the GST rules? 3. RELAVENT FACTS OF THE CASE a. The applicant has a unique business model comprising of three entities, first, the applicant as the 'Taxi Aggregator', second, an In-charge for each District known as 'Associate Partner' (usually a proprietor or single individual) and third, the 'Taxi Driver'/ 'Owner'. The applicant/aggregator is responsible for linking the Driver to the Passenger. The applicant does not own any vehicle nor does he employ the driver. Both are independent and are free to switch on or switch off from the App. The driver is however registered with the Taxi Aggregator. The responsibility of the Associate Partner is on-boarding and scaling up of business by registering the passengers, taxies and drivers. As a District in-charg ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red with Owners or Drivers. B. The applicant submits that as per the Karnataka On-demand Transportation Technology Aggregators Rules, 2016 - Rule 9 (3) - No passenger shall be charged for dead mileage and the fare shall be charged only from the point of boarding to the point of alighting. Hence the pick-up charges are paid to the driver (either as pick up cost or incentive to cover up where pick up costs are high in some other cases), by the applicant. C. The applicant submits that the drivers are covered by an insurance program and the premium amount is collected from the passenger. D. The applicant submits that there is also a provision for the passengers to rate the driver's services after the ride and also to tip him. This is called Goodwill bonus which is paid to the driver (not the Owner of the Vehicle). This is purely a voluntary amount payable by the Passengers (at the time of rating the service) to the driver, which is credited to the DYUT wallet of the drivers and on which Applicant collects the service charges (Ref S. No. 4.1 above charges) and also GST on gross value. E. The applicant further submits t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... taxi aggregation service on a pan-India basis; they are responsible for linking the driver to the passenger; they neither own any vehicle nor employ the driver; the drivers are registered with them; they utilise the services of 'Associate Partner', one or more in a district, who is responsible for the well being of the passengers and of the drivers viz., accidents etc. In the revenue breakup provided by the applicant, it is seen that they are charging GST from passengers on the basic fare paid to the driver, collecting pick up cost from the passenger, service charge, associate partner's charge and payment gateway charge. Besides, the applicant also collects toll charges, luggage charges, waiting charges, cancellation, insurance etc which may be shared with drivers. Further there is 'Goodwill Bonus' which is purely a voluntary amount paid by passengers to drivers at the time of rating the services which is credited to the driver's account by the applicant. The applicant collects service charge on this amount. Lastly, there is a Participation Fee which is a payment made by drivers to the applicant when they bid for passengers offering different fares. In view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... discuss the question of composite supply in relation to activities performed by the applicant. We observe that the applicant is offering a platform to the passengers as well as to the drivers and is collecting service charges. The conditions for a supply to be considered as a Composite Supply are (i) the supplier (taxable person) should supply two or more taxable supplies to a recipient, (ii) the said supplies should be naturally bundled and (iii) the supplies should be supplied in conjunction with each other, in the ordinary course of business, one of which is a principal supply. In the instant case, we observe that the applicant is providing two taxable services, i.e. providing an online platform and insurance coverage to the passenger. It is an admitted fact that the insurance coverage to the passenger is optional and also online platform service is neither related to nor ancillary to insurance service. Thus these two supplies are not naturally bundled. Further the said supplies are not in conjunction with each other, in the ordinary course of business. Therefore, we conclude that the activities performed by the applicant do not amount to a composite supply. 5.5 The second ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GST has to be collected and remitted? In this regard, we observe that that the responsibility of the associate partner includes on boarding and scaling up of business by registering the passengers and owners/ drivers along with taking care of their well being during accidents etc. We find that the associate partner is providing support services to the applicant in terms of increasing the magnitude of the business by providing assistance to the applicant's customers/ users and taking care of them in time of need. Further the said services are not part of the services of transportation of passengers through the e-commerce operator and hence are not covered under Section 9(5) of the CGST Act 2017. We observe from the revenue breakup provided by the applicant that the applicant's service charges, associate partner's charges and payment gateway charges are collected together from the passenger by the applicant. The passenger does not know the heads under which these amounts are collected but pays the total amount. Thus it is nothing but classification of income to different heads. The instant question is relevant to only associate partner's charges. We find tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ill bonus being paid by passenger to the driver and on which the applicant collects the service charges, i.e whether the service charges so collected attract GST and if so at what rate? We find that goodwill bonus is a voluntary payment made by passengers when they are happy with the service provided by the drivers. It is outside the fold of basic fare charged from the passengers for the trip. The applicant collects service charge on the goodwill amount. We find that the service charge collected for facilitating the payment of goodwill amount to drivers is consideration in terms of Section 2 (31) of CGST Act, 2017 and hence is liable for GST at 18% under heading 9985 vide clause (ii) of Sr. No. 23 of Notification No. 11/2017- Central Tax (Rate) dated 28.06.2017. 5.9 The sixth question is whether the charges for cancelling the trip for any reason attract GST liability? In this regard, we find that the applicant has submitted that cancellation charges collected from the passengers may be shared with the owners or drivers. We find that the activity of tolerating the cancellation by the applicant for a consideration is supply of service by virtue of clause (e) of para 5 of Sch ..... X X X X Extracts X X X X X X X X Extracts X X X X
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