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TMI Blog2022 (11) TMI 256X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cation : The advance rulings are sought by the applicant on the questions, at para 3 supra, in respect of the issues of (i) applicability of a notification issued under the provisions of this Act, (ii) determination of the liability to pay tax on any goods or services or both and (iii) whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both, within the meaning of that term, which are covered under Section 97(2)(b), 97(2)(e) 97(2)(g) respectively and hence the application is admissible under Section 97(2)(b), 97(2)(e) 97(2)(g) of the CGST Act 2017. 5. BRIEF FACTS OF THE CASE: The applicant furnished the following facts relevant to the issue/s: 5.1 The applicant provides computer application services (herein after referred to as APP ) for facilitating business transactions of goods or services or both connecting through the platform of suppliers/sellers and recipients/buyers. They charge membership subscription fee to the person who enrolls by furnishing the application in the pre-subscribed form. Applicant discharges output tax on the membership/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emitting tax in terms of the charging provisions of Section 9(1) of the CGST Act and Section 5(1) of the IGST Act and Notification No. 11 /2017-Central Tax (Rate) dated 28.06.2017. 5.6 Applicant is focused on creating a system that helps link consumers to service providers whilst maintaining a safe digital ecosystem for both parties. The App, with a commission free monetization model, is a service provider's hub wherein they have absolute ownership of their supply and the applicant has no rights over the supply. Any individual, manufacturer, wholesaler, retailer, buyer etc., can register on the APP by making payment of membership fee fixed from time to time on annual basis and this membership fee is payable as renewal fee during each year from the date of their registration on the App. 5.7 The registered member, after making payment of membership fee, can publicise their products or publish the nature of services provided, nature of facilities provided for or any other activity undertaken benefitting the users. The relationship between the members registered on the App and the customers would be of supplier and recipient and any monetary consideration involved between the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e APP and not the applicant and therefore, the liability to pay tax on the value of all such supplies is on the respective suppliers and certainly not on the applicant. Further the provisions of Section 9(1) of the CGST /KGST Act and Section 5(1) of the IGST Act are not subject to Section 9(5) and Section 5(5) of the said Acts respectively. 6.4 The definitions of the expression electronic commerce under Section 2(44) and the expression electronic commerce operator under Section 2(45) of the CGST Act 2017, the provisions of Section 9(5) of the CGST Act 2017 and Section 5(5) of the IGST Act 2017 and the notifications issued there under shall have the applicability only to electronic commerce operators i.e. the taxable persons who supply goods or services or both on their own account or on account of others with the aid and application of the APP platform and they (such taxable persons) either undertake to supply goods or services or both on their account or on account of other taxable persons and directly or indirectly connected with entering into contract for supply, storing/ warehousing, packing, delivery of goods, collection of consideration etc. 6.5 The applicant, i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce on 01.09.2022, submitted additional write up on their application, along with a copy of The Karnataka On demand Transportation Technology Agreement Rules 2016, as Annexure I to their letter supra, vide their letter dated 03.09.2022, inter alia stating as under: 8.1 The applicant quoting the definitions of 'electronic commerce' and 'electronic commerce operator' in terms of Sections 2(44) and 2(45) respectively, Section 9(5) of the CGST Act 2017 and Notification No. 17/2017-Central Tax (Rate) dated 28.06.2017 wherein it is notified that the tax on intra-state supplies of services by way of transportation of passengers by a radio-taxi, motor cab, maxi cab and motor cycle shall be paid by the electronic commerce operator submits that the applicant is a technology provider to cab service provider and would like to distinguish from rent-a-cab aggregator; they are not registered with the regional transport office (RTO) as a rent-a-cab aggregator and thus they are not an e-commerce operator. 8.2 The tax on intra state supplies of notified services shall be paid by the e-commerce operator, in terms of Section 9(5) of the CGST Act 2017, only if such services are sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d) The fare details are not known to the applicant e) The fare and method of its collection is not known to the applicant f) The fare is not collected through the applicant g) The applicant is not responsible to the supplier for non-receipt of the consideration for the supply h) The applicant is not responsible to the consumer for deficiency on the part of the supplier in rendering of the services. 8.5 It can be clearly concluded, from the above, that the applicant is only involved in meeting the supplier of services and consumer of the services and no further, which is similar to Just dial or business linking services. The supply happens independent of the applicant and the applicant is involved in identification of the supplier of services and doesn't take responsibility for the operational and completion of the ride. The applicant doesn't fulfil the conditions stipulated in Section 9(5) of the CGST Act 2017, which is supply of services through , as no portion of supply of services is under the control of the applicant. The applicant can't control the fare of the ride and the collection associated with completion of the ride and thus the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rnishing required documents as well as on entering into EULA (End User Licence Agreement). In view of this, the applicant sought advance ruling in respect of the questions mentioned at para 3 supra. 12. The applicant submits that their APP allows to create two types of accounts i.e. Business User Account and Individual User Account; the Business User can supply goods or services or both to the individual users; the terms conditions governing business contracts of supply such as class, quality, quantity, price, value of goods, schedule of delivery etc. are mutually agreed upon by the Business user and their clients and applicant does not have any say/role; that the applicant are not involved either directly or indirectly in supply of goods or services or both; they are not concerned with the collection of the consideration for such supplies; they are limited to providing the APP services and collection of registration subscription fees from their subscribers of their APP; they charge, collect and remit the tax, on the fees so collected, in terms of Section 9(1) of the CGST Act 2017 and Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. 13. The applicant further ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ions of this Act shall apply to such electronic commerce operator as if he is the supplier liable for paying the tax in relation to the supply of such services: Provided that where an electronic commerce operator does not have a physical presence in the taxable territory, any person representing such electronic commerce operator for any purpose in the taxable territory shall be liable to pay tax: Provided further that where an electronic commerce operator does not have a physical presence in the taxable territory and also he does not have a representative in the said territory, such electronic commerce operator shall appoint a person in the taxable territory for the purpose of paying tax and such person shall be liable to pay tax. 16. It could be inferred from the definitions supra 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 appli ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , 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. 19. In view of the foregoing, we pass the following RULING a. The Applicant satisfies the definition of an e-commerce operator but does not satisfy the conditions of Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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