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TMI Blog2023 (4) TMI 1209X X X X Extracts X X X X X X X X Extracts X X X X ..... services and the "work" of providing transportation services/food deliver services on behalf of Uber are being conducted by the driver- partners, restaurant partners & courier parnters for Uber and therefore UISPL, which is the paying entity to the driver, restaurant partners & courier parnters is the "Person responsible for paying"? (ii) Uber India System Pvt. Ltd. (UISPL) is not merely an agent of Uber B.V./ Uber Portier B.V. but also conducts all the actual business operations of the group in India and therefore the contractual relations and mutual arrangements as well as the actual conduct of parties, economic 'substance' not the 'form' would define the correct relationship of UISPL, Uber B.V./ Uber Portier B.V. and the driver- partners, restaurant partners & courier parnters to bring UISPL into its sweep of 'person responsible for paying' for purpose of section 204 of the IT Act. (iii) Since UISPL was making payment on behalf of Uber B.V./ Uber Portier B.V. for the 'work' or services rendered by driver partners, restaurant partners & courier parnters in India, it was still a "Person responsible for paying" within the meaning of section 204 o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ance of the Revenue is pertaining to the applicability of section 194C of the Act on payments made to driver-partners under the Uber App and payments made to the restaurant and courier partners under the Uber EATS App. The brief facts of the case are that the assessee was incorporated in India in 2013 and is running the business of Uber BV and has offices across the country. Uber BV is an entity incorporated in the Netherlands and is the legal owner of the software application called Uber App. The primary services provided through this mobile App is the transportation services wherein the passenger looking for a ride on the App and the driver/vehicle owner willing to offer accepts the offer. During the year, the main services provided by Uber BV through the assessee are taxi services and food delivery services. 4. For the Transportation Services, its activities involve recruitment and training of drivers (onboarding), getting the verifications done from the police, acting as a physical point of contact for the users/drivers authorities, carrying out business development in terms of ensuring that more and more passengers and drivers get associated with Uber, taking care of legal an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or, and the specified person, which is a foreign enterprise Uber BV, but as far as the liability to deduct TDS, the same lies on the person, i.e. the assessee, who is making the payment. It is further held that the driver is the recipient of the money and there is no doubt about it. Therefore, as per the provisions of the Act, the person responsible for the payment to the driver is the person liable to deduct TDS. Accordingly, the AO-TDS held that the assessee is making substantial payments to driver partners, the restaurant partners, and the courier partners without deducting tax at source, thereby violating the provisions of Chapter XVIIB of the Act and more specifically section 194C r/w section 204 of the Act. 7. The learned CIT(A) vide impugned order following the decision of the coordinate bench of the Tribunal in assessee's own case for assessment years 2016-17 and 2017-18 set aside the order passed by the AO-TDS under section 201(1)/201(1A). Being aggrieved, the Revenue is in appeal before us. 8. We find that the coordinate bench of the Tribunal in assessee's own case in M/s Uber India Systems Private Ltd vs JCIT-TDS, in ITAs no. 5862 and 5863/Mum./2018, vide order dated 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Our view is further fortified by the fact that the User is also entitled to make payments in cash directly to the Driver-Partner. We hold that there cannot be any divergent stand that could be taken for a User who decides to make payment in Cash directly to the Driver-partner and for a User who decides to make digital payments. In respect of digital payments made by the User, UISPL is only a payment and collection service provider which collects the money and makes the payment on behalf of Uber B.V. Moreover, when the User directly makes cash payment to the Driver-Partner, the assessee company is not even made aware of the same. Hence expecting the assessee company i.e. UISPL in such circumstances to implead itself and deduct tax at source would only result in impossibility of performance in the hands of assessee company. The famous legal maxim would come to the rescue in this regard - LEX NON COGUT AD IMPOSSIBLIA - meaning thereby that a law cannot compel a person to perform an act which he could not possibly perform. This legal maxim has been further approved in the decision of Hon'ble Supreme Court in the case of Krishnaswamy Bros reported in 281 ITR 305 (SC). 3.5.4. We f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion 204(iii) of the Act which defines "person responsible for paying" is also not applicable in the instant case in view of the fact that - to fall within the scope of section 204(iii) of the Act, it is necessary that a person is the payer of any sum chargeable to tax. In the instant case, UISPL is not a payer of money or liable to pay money but only a remitter of money which is collected from the Users on behalf of Uber B.V. and thereafter remitted/ disbursed at the instructions of Uber B.V. to the Driver-Partner. Hence, in the aforesaid transaction, it is User who is the person responsible for paying, as he enters into a contract with the Driver-Partner pursuant to which the transportation service is rendered by the Driver-Partner to the User . Therefore, it is submitted that the User is the person responsible for paying for the purpose of section 194C read with section 204 of the Act. Hence it could be safely concluded that UISPL cannot be treated as a person responsible for paying within the meaning of section 194C read with section 204 of the Act as it has not entered into any agreement with the Driver-Partners as stated supra. 3.5.7. We find that the reliance placed by the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t the learned Assessing Officer while framing the income tax assessment in the hands of UISPL u/s 143(3) of the Act dated 8.12.2018 had treated the assessee company being engaged in the business of providing marketing and support services to Uber and not as a transportation service provider. Admittedly, no disallowance of expenditure u/s 40(a)(ia) of the Act was made in the hands of the assessee company for violation of provisions of Chapter XVII-B of the Act. While this is so, how can the TDS Assessing Officer take a divergent view on the same issue by changing the nature of business carried out by the assessee. 3.5.11. We further find that the legislature in its wisdom had duly provided for the relevant provisions in the Act by specifically mentioning mere remitter of money to deduct tax at source as is provided in section 204(iv) of the Act, wherein, Drawing and Disbursing Officer (DDO) i.e. the remitter of money for Government, wherever required, need to deduct tax at source being person responsible for paying. The said provision is restricted to payment made by DDO on behalf of the Government and the same cannot be extended to other payments made by outsiders. 3.5.12. Henc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Driver-Partner to the User. k) Clause 4.6. - Uber B.V. will issue a receipt to the User on behalf of the Driver-Partner, for the money collected for transportation service provided by a Driver-Partner to the User. (emphasis supplied by us) l) Clause 8 - It is the Driver-Partner's responsibility to ensure that insurance is taken for any liability that may arise on account of transportation services and/or as required by law. m) Clause 13.1. - Uber B.V. acts as an agent of the Driver-Partner for the limited purpose of collecting the payment from the User. The Driver-Partner is not an employee, agent, etc. of Uber B.V. and there is no partnership or Joint venture between Uber B.V. and the Driver-Partner. 3.6.1. Similarly, the Users wishing to avail of Uber B.V.'s lead generation services enter into agreements/ contract with Uber B.V.. The relevant clauses of the said agreement entered into between Uber B.V. and the Users which are enclosed in pages 69 to 75 of the paper book are summarized as under:- a) Clause 2 - Uber B.V. provides a technology platform to the User and the User agrees that the transportation service is not provided by Uber B.V.. Uber B.V. does no ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... recognized as an "aggregator" under the Service Tax Law. Section 66B of Finance Act, 1994 provides that service tax to be paid at prescribed percentage on the value of services provided in India. Correspondingly, Rule 2(1)(d)(ii) prescribed person providing service as a Person liable for paying service tax. Section 68(2) of the Finance Act, 1994 provides that on specified services the service tax shall be paid by prescribed person. In March 2015, Central Board of Excise and Customs vide Notification No. 7/2015 dated 1.3.2015 notified that whenever an aggregator is involved in any manner in the transactions, then the person providing is not liable to pay service tax but aggregator is the person liable to pay service tax. For this purpose, Rule - 2(1)(d)(i)(AAA) of Service Tax Rules, 1994 was amended to provide that the aggregator liable to pay service tax if he is involved in the transaction in any manner. These documents are enclosed in page 90 of the paper book filed before us. Accordingly, later on, vide letter dated 27.4.2015, Uber B.V. intimated the service tax authorities that Uber B.V. has discharged its liability of service tax as an aggregator. Evidences in this regard are ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Similar comparison can be made with matrimony websites apps like shaadi.com. bharat matrimony, wherein the profiles of candidates eligible for marriage are being displayed (post background checks). These apps just connects two willing candidates with each other. However, the website/app is not and cannot be held liable for fault in the marriage of the two. 3.10. Let us now look into the issue in dispute in the context of amendment brought by Finance Act 2020 in section 204 of the Act. The amendment made in section 204 (person responsible for paying) of the Act by way of insertion of clause (v) thereon is as under:- Section 204 - For the purposes of the foregoing provisions of this Chapter and section 285, the expression "person responsible for paying" means - (i) ................ (ii) ................ (iii) ................ (iv) ................ (v) in the case of a person not resident in India, the person himself or any person authorized by such person or the agent of such person in India including any person treated as an agent under section 163. 3.10.1. We find that the insertion of clause (v) in section 204 of the Act is effective only from 1.4.2020 i.e. applic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under consideration." 9. We find that the coordinate bench of the Tribunal in assessee's own case in Uber India Systems Private Ltd vs JCIT-TDS, in ITA No. 711/Mum./2020, for the assessment year 2018-19, vide order dated 30/01/2023 rendered similar findings in respect of payment made to driver partners on behalf of the Uber BV for the transportation services. In the year under consideration, the assessee provided taxi services as well as food delivery services in India through its mobile application. However, it is an accepted position that Uber EATS is a food delivery App on a similar pattern as Uber App and is a Restaurant Aggregator platform akin to Uber App being a ride-sharing platform. We find that the AO-TDS also rendered similar findings in respect of payments made under the food delivery services. 10. The learned Departmental Representative could not show us any reason to deviate from the aforesaid decisions rendered in assessee's own case and no change in law was alleged in the relevant assessment year. The issue arising in the present appeal is recurring in nature and has been decided by the coordinate bench of the Tribunal in the preceding assessment years. Thus, res ..... X X X X Extracts X X X X X X X X Extracts X X X X
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