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TMI Blog2024 (6) TMI 9X X X X Extracts X X X X X X X X Extracts X X X X ..... them including name, address, geo-location etc., on the said platform - the applicant facilitates the partner / service provider in supplying their service to the end user making use of the App maintained by them and enables the user to get to the door step service. Hence, the applicant squarely fits into the definition and qualifies to be an Electronic Commerce operator. Applicability of Section 9 (5) of CGST Act, 2017 to supplies offered over said mobile based digital platform Vyavshay owned and managed by the applicant - HELD THAT:- The Government relaxes the provisions of GST law for certain category of service providers with turnover less than threshold limit, from obtaining compulsory registration under Section 24 (ix). Also, the Government shifts the liability to pay tax to the Electronic Commerce Operator from the Service providers, for such category of Services notified under Section 9 (5) of the Central Goods and Services Tax Act, 2017. Section 9 (5) of the Act of 2017 creates a statutory obligation on the E-Commerce Operator as the deemed supplier of the services received by the consumer through the online platform facilitated by the E-Commerce Operator. Hence, the elect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) of the CGST Act, 2017, and the applicant is liable to pay GST only on the transaction between the applicant and the partners i.e based on usage of the app with respect to supply of services other than which are notified under Section 9 (5) of CGST Act, 2017. - SMT. D. JAYAPRIYA, I.R.S., AND SMT. A. VALLI, M.SC., MEMBER 1. Any appeal against this Advance Ruling order shall lie before the Tamil Nadu State Appellate Authority for Advance Ruling, Chennai under Sub-Section (1) of Section 100 of CGST Act 2017/ TNGST Act 2017, within 30 days from the date on the ruling sought to be appealed, is communicated. 2. In terms of Section 103 (1) of the Act, Advance Ruling pronounced by the Authority under Chapter XVII of the Act shall be binding only- (a) on the applicant who had sought it in respect of any matter referred to in sub-section (2) of Section 97 for advance ruling. (b) on the concerned officer or the jurisdictional officer in respect of the applicant. 3. In terms of Section 103 (2) of the Act, this advance ruling shall be binding unless the law, facts or circumstances supporting the original advance ruling have changed. 4. Advance Ruling obtained by the applicant by fraud or sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... app. Information provided by their users through the Vyavshay service contain links to third party i.e, partners that are not owned or controlled by Vyavshay. Vyavshay has no control over, and assumes no responsibility for, the content, privacy policies, or practices of any third-party websites. 3.3) As per the business model of the Applicant 'Users' are individuals who use the Vyavshay' mobile platform to request various services, such as transportation and other customer - focused offerings, 'Partners' are entrepreneurs of small and medium sized business who onboard their services with the Vyavshay mobile platform and 'Associates' are dedicated individuals responsible for delivering services within the Vyavshay' network. The partner enters into the business transaction with the users i.e the end consumers and the associates supply the services to the customer. The contract of supply such as quality of work or providing the said service, etc., are mutually agreed upon by the partner and applicant Vyavshay (the applicant) does not have any responsibility for supply of services and does not have any concern about consideration. Moreover, the considera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s of being an electronic commerce operator as the supply of services is not through them. The crucial phrase for the applicability of the section is supply of services through e-commerce operator . 3.6) They also states that Act or Notification doesn't define or clarify the situations of supply of goods/services through an e-commerce operator and thus the rules of jurisprudence and interpretation are required to understand the phrase and the word as used in common parlance. The word through it employed in Section 9 (5) is used to indicate the method under which the supply 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. In the instant case the supply is not carried on or concluded by using our app . 3.7) The applicant drew references to business models of established e-commerce operators such as Amazon, Flipkart, Urban Clap and likewise. In case of all the e-commerce operators discussed, the following business transactions undertaken by them, a. The invoices issued for supply is by the vendor, however, has the logo of the operator ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection is done independently by the partner from the end customer. 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. The applicant's nature of business doesn't allow collection of the fare on behalf of the supplier. 3.11) Based on the above the applicant concludes that the services can't be deemed to have been supplied through them (APP) just because the service is initiated through the digital platform. They reiterated that the app is only a platform to link the consumers and partners and the consideration charged by the applicant from the partners is based on the usage of the app. For instance, if a partner received 5 bookings through the App on a day and the APP is charging INR 25 per booking for that service then the invoice to the Partner from the Vyavshay would be INR 125 irrespective of the final bill amount or value of the services to the User (customer). 3.12) The applicant submits that there are two segments in the transaction, A) Transaction no. 1- In this transaction, the charges are collected by the applicant from the partners based on usage of the app. The applicant discharges output ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licant is an intermediary platform between those who want to book services and those who provide services and they do not collect the services charges on behalf of the service provider from the end user and pay the same to the service provider. Hence, it appears that they are liable to pay tax only on the consideration towards usage of app received from the associates / partners. That the conditions as prescribed under Sec 52 of the CGST Act 2017 for levy of tax for e-commerce operator is not satisfied as the applicant does not collect the consideration with respect to such supply. Hence, they are not liable for discharge of tax under Section 9 (5) of CGST Act, 2017 w.r.t. Notification No. 17/2017 dated 28.06.2017, as amended. They are liable to collect and pay the tax on the charges collected by them from their Vyavshay partners based on usage of the app, which it appears that the applicant already follows this practice only. 4.3) The State jurisdictional Officer, viz., the Assistant Commissioner (ST), Kelambakkam Assessment Circle, Chennai - 35 replied that on verification of the nature of business activities reported by the applicant, it is opined that, he falls under the defini ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... per the market demand. a. Farm equipment services: Hiring or rental services of these farm equipment-Cultivator, Thresher, Reaper, Rotavator, Soil Testing services, Sprayer, Trailor. b. Transportation services: Cab, Passenger Auto, Pick up vans, Goods Auto, JCB c. Skill based services and other services: Electrician, Plumber, Driver, Carpenter, 7.2) Primarily, every user desirous of availing the applicant's app (Vyavshay) services, shall make an apphcation online and shall enter into an agreement subject to terms and conditions. Further, as seen from the Terms of Use - Vyavshay User , the procedure for booking of services through the Vyavshayapp maintained by the applicant is reproduced as follows: The user shah follow below steps for booking services through User App a. Register with their details like phone number, email and address b. Select the address for which they require services c. Provide the date and time, indicating the booking period for which they want the service d. Based on the availability of Partner (service provider) in their area Vyavshay App will book their service and confirm. e. After confirmation of booking, partner or their representative may call the u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... here is no other link between the supplier of services and the end consumers with the applicant. The applicant further states that the consideration for supply of services is not routed through the applicant nor does he liaison in the process or take up responsibility of supply of services between the partner member and its customers. 8.2) Further, the applicant is of the view that on combined reading of the definition of e-commerce and e-commerce operators and Section 9 (5), for a person to be classified as an e-commerce operator , he should own and manage a platform and the supplies should be made through the said e-commerce platform. The applicant also stated that the applicant owns the Vyavshay app where partners are free to update the goods and services they wish to sell through the application. The partner of the APP enters into business deals/transactions on their own with their clients and business associates supply goods or services or both, the applicant is merely linking partners and end consumers. 8.3) We find that the applicant quoting the provisions of Section 9 (5) of the CGST / SGST Act 2017 has stated that they do not fulfill the conditions of being an electronic c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on 9(1) of the CGST Act 2017, provides for the Levy of tax on supply of goods or services or both as below: Section 9(1): Subject to the provisions of sub-section (2), there shall be levied a tax called the central goods and services tax on all intra-State supplies of goods or services or both, except on the supply of alcoholic liquor for human consumption, on the value determined under section 15 and at such rates, not exceeding twenty per cent, as may be notified by the Government on the recommendations of the Council and collected in such manner as may be prescribed and shall be paid by the taxable person. 8.6) The Government, in terms of Section 9 (5) of the Act authorizes/recognizes the E-Commerce Operator as deemed supplier to collect and pay the tax, in respect of intra-state supply of certain category of services as notified by the Government on the recommendations of the GST Council and the Section 9 (5) is reproduced for ease of reference, as below: Section 9 (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 servi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... with the partner or associate offline other than through the Vyavshay Application and Vyavshay shall not have any responsibility in case of such offline transactions or interaction and the information''. Similarly, as per the terms of use-Vyavshay partner and Vyavshay Associates, partner or associate shall not connect with customers offline other than through the Application mentioned and Vyavshay shall not have any responsibility in case of such offline transactions or interactions . The other condition that the materials posted and made available on the platform are only to assist user and partner/ associate in concluding the transaction . The partner/ Associate can give feedback of customer and rate them after service delivery. The above conditions establishes the fact that the applicant are retaining certain sort of responsibility and hold control over the Vyavshay partner and User, when they utilize the App for the supply of services. From the above sequence of process and the conditions imposed, we are of the view that the e-commerce operator owing to their platform and technology facilitates the service provider to render their service to the consumer at tire door st ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... other words, we should read the statute as it is, without distorting or twisting its language . The Hon'ble Supreme Court has concluded that literal rule of interpretation will prevail over all other principles. 8.11) The Supreme Court in Doypack Systems Pvt. Ltd. vs. UOI [1998 (2) SCC 299] has laid down: It has to be reiterated that the object of interpretation of a statute is to discover the intention of the Parliament as expressed in the Act. The dominant purpose in construing a statute is to ascertain the intention of the legislature as expressed in the statute, considering it as a whole and in its context. That intention, and therefore the meaning of the statute, is primarily to be sought in the words used in the statute itself, which must, if they are plain and unambiguous, be applied as they stand. 8.12) By applying the ratio laid down by the Hon'ble Court stated supra, the case on hand is examined with reference to the relevant provisions of the CGST Act 2017 / TNGST Act 2017, connected Notifications to ascertain the intention of the Government, as below; Section 22 (1) of the Act provides for the Persons liable for registration as follows: Section 22 (1) Every sup ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... registration under sub-section (1) of section 22 of the said Central Goods and Services Tax Act. (iv) supply of restaurant service other than the services supplied by restaurant, eating joints etc. located at specified premises. 8.15) Hence, we find that the Government relaxes the provisions of GST law for certain category of service providers with turnover less than threshold limit, from obtaining compulsory registration under Section 24 (ix). Also, the Government shifts the liability to pay tax to the Electronic Commerce Operator from the Service providers, for such category of Services notified under Section 9 (5) of the Central Goods and Services Tax Act, 2017. 8.16) By following the principle laid down by the Hon hie Apex Court, to ascertain the intention of the legislature in fixing the liability on the E-Commerce Operator instead of the small service providers, it will be appropriate to mention the Statement of Object and Reason herein viz the proposal, justification of the proposal and the recommendations of the fitment committee before the 20th GST Council Meeting, to bring the house-keeping services such as plumbing, carpentering etc, within the beneficial sweep of Secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ce providers listed on the Vyavshay app i.e., partners directly. As per the definition of Users in the Business Model provided by the applicant it is seen that throughout the booking process, users receive detailed information about service rates and availability in their local area. Also, users can track service delivery personnel in real-time, ensuring transparency and timely service. After the service is provided, users confirm payments made to the associates, thus completing the entire transaction process. Hence we can see that though the partners are the actual service providers, the applicant through the app is not only involved in linking the service users / customers and the service providers / partners but also facilitating booking of the required services, tracking service delivery personnel in real time and confirmation of payment to the associates . 8.19) We find that the applicant has also made submissions that in cases of electronic digital platforms such as Amazon, Flipkart, Urban clap and others, though the invoices issued for supply is by the vendor the logo of the operator is mentioned on the face of the invoice, indicating responsibility of supply. That charges s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onic commerce operator if such services are supplied through it and all the provisions of the Act shall apply to such electronic commerce operator as if he is the supplier liable to pay tax in relation to the supply of such services. Section 9 (5) enables the Government to shift point of levy on supply of certain services through E-Commerce Operator from supplier to E-Commerce Operator. Only few services are notified u/s 9 (5) in Notn. No. 17/2017 and the supply of such services alone qualify for shifting tax burden from supplier to E-Commerce Operator. In all other cases, supplier has to discharge the tax liability as per the provisions of the GST Act. 8.21) In this case, the applicant facilitates the supply flow from the supplier to the customer and the applicant takes responsibility on such supplies carried through their App and specifically excludes themselves from any responsibility if there is any off line supply takes place between the supplier and customer. The clauses 4.3 and 4.4 found in the Terms of Use-Vyavshay User and Vyavshay partner respectively, as discussed in para 8.9, would otherwise, show that the responsibility of the supply made through App lies with the appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... from each other, exemption available to individual service providers cannot be said to be available to ECOs - Relationship between ECOs, consumer and vendor are on principal-to-principal basis - ECOs are not acting as agents of auto-rickshaw drivers/bus operators - Consumer while opting to avail services of ECO, is also opting for these add on services as a result of same, ECO itself becomes supplier and is not acting as an agent of supplier - As ECOs are providing bundle of services, they are an independent supplier of service and service provided by an independent supplier is only one facet of bundle of services assured by ECOs to consumer. 8.23) From the above ruling it can be seen that the treatment of tax is different for the same supplies when made through E-commerce Operator. We reiterate that in the instant case, the supplies are made through the applicant's app Vyavshay and the provisions of Section 9 (5) of the CGST Act 2017/ TNGST Act 2017 are very much applicable to the applicant. 8.24) In view of the above discussions we find that the applicant squarely falls under the ambit of Section 9 (5) of the CGST Act 2017/ TNGST Act 2017 w.r.to notification no. 17/2017 date ..... X X X X Extracts X X X X X X X X Extracts X X X X
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