9911796707
TMI Blog2023 (9) TMI 1121X X X X Extracts X X X X X X X X Extracts X X X X ..... ma Yatri" is a ride-hailing SaaS platform / Mobility as a service (MaaS) solution offered to the auto-rickshaw community of Bengaluru which includes a driver-side software and customer-side software. "Namma Yatri" is a software developed, owned and operated by Juspay. 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 Namma yatri) to his customers (who also have subscribed to Namma yatri) 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 services supplied by the service provider (person who has subscribed to Namma Yatri) to his customers (who also have subscribed to Namma Yatri) 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ri" by the subscribers of the "Namma yatri". The clauses 3, 4, 9 and 11, contained in the "Driver's Terms and Conditions" are re-produced in Annexure - 5 for ready reference": 5.4 Further, when the "Driver's Terms and Conditions" is read as a whole, it confirms and establishes the facts that where the licensee creates "Business User Account" ("BSA" for short), in terms of clause 2 and 3 of the "Driver's Terms and Conditions"; the subscriber of the "Namma Yatri" enters into business deals/transactions on their own with their clients and business associates for supply of services, the terms and conditions governing such contracts of supply, such as quality, price, etc., are as mutually agreed upon by them and the Applicant neither has a say/ a role in that regard nor the Applicant is involved directly or indirectly in such supply and providing of services 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 "Namma Yatri" of the Applicant and their business clients and associate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ther arranging for supply of services from the members registered on the Namma yatri or arranging for collection of any consideration or any other form of agreed means of payment from the buyers to the registered members. 5.10 Therefore, the business model of the Applicant is neither in the nature of "market place electronic commerce" or "fulfillment electronic commerce" nor "hybrid electronic commerce" models. 6. Applicant's understanding of Law: The applicant furnished their understanding / interpretation of law inter alia stating as under: 6.1 In the light of the terms and conditions contained in "Driver's Terms and Conditions" and the facts narrated and explained as above, it is bonafide belief and understanding that the Applicants liability to pay tax is limited to payment of tax at the rate of 18% under Section 9(1) of CGST and SGST Acts and Section 5(1) of the IGST Act, read with Notification No. 11/2017-Central Tax (Rate) dated 28.6.2017 issued under the CGST Act and similar/identical notification issued under Section 9(1) of the Karnataka SGST Act and Notification No. 8/2017-Integrated Tax (Rate) dated 28.6.2017, on the consideration received/receivable of "registration ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f that the said provisions and the notifications issued thereunder, shall have applicability only to "electronic commerce operator" like Reliance Jio or Amazon or such other taxable persons who supply goods and/or services or both on their own account or on account of others with the aid and application of the "APP PLATFORM" and they either undertake to supply goods and/or services or both on their own account/ 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. Section 2(44) Section 2(45) Section 9(5) "2. In this Act, unless the context otherwise requires: - (44) "electronic commerce" means the supply of goods or services or both, including digital products over digital or electronic network." "2. In this Act, unless the context otherwise requires: (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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n no way the Applicant is liable for tax on the transactions that takes place subsequently between the registered members (service provider) on our Namma yatri and their customers. 7.2 Applicant submitted that Section 7(1)(aa) of the CGST Act, has been retrospectively inserted from 1st July, 2017 which states that any activities or transactions, by a person, other than an individual, to its members or constituents or vice-versa, for cash, deferred payment or other valuable consideration shall be considered as a Supply. Explanation: For the purposes of this clause, it is hereby clarified that, notwithstanding anything contained in any other law for the time being in force or any judgment, decree or order of any Court, tribunal or authority, the person and its members or constituents shall be deemed to be two separate persons and the supply of activities or transactions inter se shall be deemed to take place from one such person to another. 7.3 Section 9(5) r/w notification No 17/2017 dated 28.06.2017, notification No 23/2017 dated 22.08.2017 and notification No 17/2021 dated 18.11.202 doesn't contemplate or envisaged non-interfering and commission free business adopted by the App ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... .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 rickshaw drivers 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 as they do not fulfil the mandated conditions and thus they are not an e-commerce operator. 9.2 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 supplied through it (e-commerce operator platform). The crucial and relevant aspect of the section and its applicability are as follows:- a) The services by the supplier to the consumer are supplied through the electronic commerce operator b) ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n rendering of the services. 9. 5 It can be clearly concluded, from the above, that the applicant is only involved in connecting the supplier of services and consumer of the services with no further involvement (like a 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 applicant can't be held liable to collect and pay the tax as specified in Section 9(5) of the CGST Act 2017 read with Notification No. 17/2017-Central Tax (Rate) supra. The applicant's nature of business doesn't allow collection of the fare on behalf of the supplier. Thus the services can't be deemed to have been supplied through it (APP) just because the service is initiated through it. 9. 6 An e-commer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the "Namma Yatri" APP allows to create two types of accounts i.e. Business User Account for service provider (auto driver) and the Individual/Customer User Account for service recipient (recipient of service provided by auto driver). Clauses 3, 4, 9 & 11 of the "Drivers Terms and Conditions" establish that the nature of agreement/contract is limited to providing licence or permission to use "Namma Yatri" App.; the subscriber of the APP enters into business deals/transactions on their own with their clients and business associates for supply of services, in terms of clauses 2 & 3 of the "Drivers Terms and Conditions"; the terms & conditions governing business contracts of supply such as quality, price 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 services; they are not concerned with the collection of the consideration for such supplies; the subscribers of the impugned APP are not under any obligation to furnish the details of their business transactions such as nature of supply etc., during the licence period; they are limited to providing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s 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 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 s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the category of services of Intra-state supplies are notified by the Government covering services by way of transportation of passengers by motor cab. However, the crucial and most important issue is whether the impugned services are supplied through the electronic commerce operator or not. 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. 19. 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, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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