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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 ..... nataka and the said services are meant for facilitating business transactions of supply of goods or services or both connecting through the platform of suppliers/sellers and recipients/buyers. 3. In view of the above, the applicant has sought advance ruling in respect of the following questions:- a. Whether the Applicant satisfies the definition of an e-commerce operator and 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. Whether the 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 amounts to supply by the Applicant? c. Whether the Applicant is liable to collect and pay GST on the 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? 4. Admissibility of the application : The advance rulings are sought by the applicant on the questions, at para 3 supra, in respect of the issues of (i) applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e of delivery goods etc., are as mutually agreed upon by them and the applicant neither has a say / role in that regard nor the applicant is involved directly or indirectly in such supply and delivery of goods or providing services or both as the case may be; the applicant is not in any way concerned with collection of the consideration for supply from the clients/business associates of the subscribed suppliers; all such matters are only within the knowledge and domain of the subscribers of the "APP" of the applicant and their business clients and associates. 5.5 The subscribers of the "APP" are not under any obligation to furnish the details of business transactions entered into by using the APP of the applicant such as nature and volume of supply at any time during the period covered by the licence or at any time thereafter; the taxable supplies effected by the applicant is limited to providing of "APP" and collection of registration & monthly subscription fee from their subscribers of "APP" and charging, collecting and remitting 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 (Rat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly subscription". Further the applicant is not liable to pay tax under Section 9(5) of the CGST/KGST Act 2017 and Section 5(5) of the IGST Act 2017 read with Notification No. 17/2017-Central Tax (Rate) dated 28.06.2017. 6.2 The principal charging provisions are section 9(1) of the CGST/KGST Act 2017 & Section 5(1) of the IGST Act 2017 and in terms of said sections the liability to pay tax on "outward" taxable supplies of goods or services or both, as the case may be, is on the "supplier". Section 2(105) defines the expression "supplier", in relation to any goods or services or both which shall mean the person supplying the said goods or services or both and shall include an agent acting as such on behalf of such supplier in relation to the goods or services or both supplied. 6.3 The taxable supplies effected by the subscribers of the "APP" of the applicant to their clients/business associates by using the applicant's APP, the suppliers for the purpose of CGST/KGST/IGST Acts are the subscribers of the 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 017 and notification No. 17/2021 dated 18.11.2021 doesn't contemplate or envisaged non interfering and commission free business adopted by the applicant. It is applicable to business model which collects payment on behalf of the supplier. As the applicant has not collected any payment on behalf of the supplier the question of collecting tax on behalf of the supplier can't arise. Hence, the applicant would not be liable for the GST on the transaction carried on by the supplier with his customer. Moreover, the supplier raises invoice to his customer & the customer pays directly to the supplier which rules out any attempt on the part of the applicant to pay taxes of the supplier. PERSONAL HEARING PROCEEDINGS HELD ON 18.08.2022 7. Sri Chetan Kumar, Chartered Accountant & Authorised Representative of the applicant appeared for personal hearing proceedings and reiterated the facts narrated in their application. 8. The applicant vide their letter dated 29.08.2022, received in this office 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 sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or group of words, such as in, from, to, out of and on behalf of, used before a noun or pronoun to show place, position, time or method". The word through in Section 9(5) is used to indicate the method under which the supply of services was initiated, carried on and concluded. The dictionary meaning clearly specifies that the word through implies that the supply should be initiated, carried on and concluded by the specified method. 8.4 In the instant case the supply is not carried on and concluded by using our app. We invite attention to the facts furnished in the application as well as our submissions during the personal hearing, which are reiterated as under:- a) We provide technology to cab operators (through the APP). This allows the passenger to identify the nearby cab through which he can take the ride and no further b) The ride is not monitored by the applicant c) The completion of the ride is not known to the applicant 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the KGST Act. 10. We have considered the submissions made by the applicant in their application for advance ruling. We also considered the issues involved on which advance ruling is sought by the applicant and relevant facts along with the arguments made by the applicant & the submissions made by their learned representative during the time of hearing. 11. The applicant provides computer application services through the APP known as MYn for facilitating business transactions of goods or services or both connecting through the said APP/platform to the suppliers/sellers and recipients/buyers, registered under the said APP on payment of membership charges & subscription fee and also on furnishing 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licant 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. We proceed to examine the said issue and in this regard we invite reference to the Section 2(44), 2(45) and 9(5) of the CGST Act 2017, which are as under:- 2(44)- electronic commerce means the supply of goods or services or both, including digital products over digital or electronic network; 2(45)- electronic commerce operator means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce; 9. Levy and collection. (5) The Government may, on the recommendations of the Council, by notification, specify categories of services the tax on intra-State supplies of which shall be paid by the electronic commerce operator if such services are supplied through it, and all the provisions 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 ele ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The word "through" in Section 9(5) is not defined in the relevant context and hence we proceed to discuss the meaning of the said word / phrase. 18. In this regard, we invite reference to Merriam Webster dictionary, in accordance to which the word 'through' is used as a function word to indicate means, agency, intermediacy such as by means of, by the agency of etc. The word 'through' is also used as a function word to indicate extent, period of time such as during entire period, from the beginning to the end, to and including etc. Thus 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 ce ..... X X X X Extracts X X X X X X X X Extracts X X X X
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