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TMI Blog2024 (10) TMI 194X X X X Extracts X X X X X X X X Extracts X X X X ..... both, including digital products i.e. a platform which in common parlance is said to be an electronic commerce platform can be said to be an Electronic Commerce Operator. Admittedly, in the instant case, the applicant is the owner of a digital platform namely the Yatri Sathi App and provides supply of services to the drivers by way of allowing the drivers to use the digital platform against a consideration. The applicant thus fits into the definition and qualifies to be an Electronic Commerce Operator in terms of section 2 (45) of the GST Act. Whether the applicant shall be deemed to be the service provider under section 9 (5) of the GST Act read with notification no. 17/2021-Central Tax (Rate) dated 18th November, 2021 for the Driver services provided by the Driver to the Customer connected by Yatri Sathi Mobile App ? - HELD THAT:- The first two arms of the conditions as laid down in Section 9 (5) of the GST Act get satisfied, i.e. the instant services are notified by the Government and the supply is intra-state in nature. Now, this issue narrows down to the focal point as to whether this service is supplied through (emphasis added) the electronic commerce operator or not. The wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GST Act both. 1.2 The applicant is a society registered under the West Bengal Societies Registration Act, 1961 which is a non-profit organisation who is engaged as a research and development organisation under the Department of Information Technology Electronics, Government of West Bengal and is inter-alia engaged in the development of language tools technology as well as Online Literary Linguistic resources etc. 1.3 The applicant, under the direction of the Government of West Bengal, has developed a website and mobile application named Yatri Sathi Mobile App (hereinafter referred to as the App ). The App has been launched on the ONDC platform and is designed as a ride-hailing Software as a Service (SaaS) platform, also categorized as a Mobility as a Service (MaaS) solution. The primary purpose of the App is to facilitate the business transaction of supply of services by connecting customer to the drivers of West Bengal. 1.4 The applicant has made this application under sub-section (1) of section 97 of the GST Act and the rules made there under seeking an advance ruling in respect of following questions: (i) Whether the applicant falls under the purview of the E-commerce Operator a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ter for and maintain an active personal user account. For integrating the driver vehicle and on-boarding as a Driver on a platform, driver must complete the registration process on the Driver App. As part of this application process, drivers are required to upload specified documents as needed. Upon submission of the application, the granting of a license to use the App is contingent upon acceptance of the terms and conditions set forth between the Applicant and the driver (hereinafter referred to as the Driver's Terms and Conditions ). These terms and conditions must be accepted by the driver before they can use the App. Similarly, any customer or passenger wishing to use the Yatri Sathi Mobile App must download the App and provide the necessary information as required. After providing the required information, the customer must accept the terms and conditions set forth between the Applicant and the customer (hereinafter referred to as the Customer's Terms and Conditions ) to proceed with using the App. As per the Drivers terms and conditions, the Applicant's role is limited to providing a platform for drivers and customers to connect, without exercising any control or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, who is liable to tax under the relevant provisions of the Act. 2.6 The main content of the Applicant is that it is the person who supplies the goods or services or both including his agent shall be liable to pay tax. The specific scenario at hand involves the Driver providing services to customers via the App where the App serves only as a digital platform facilitating the connection between the Driver and the customers and hence the Applicant is merely a facilitator, and not the direct provider of any transportation services which should make the driver, who is directly providing the service, liable for paying the GST on the transportation services provided. In this context, the Applicant emphasizes on clause 11 of the drivers terms and condition, claiming that the drivers are designated as independent contractors and the relationship between the Applicant and the drivers operates on a principal-to-principal basis and not agent. The said clause is represented as below: 11. RELATIONSHIP BETWEEN THE PARTIES The Driver shall operate as and have the status of an independent contractor. The relationship between the Company and the Driver is on a principal-to-principal basis and not ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... said Terms and Conditions as cited by the Applicant are represented separately as below: DRIVER S TERMS AND CONDITIONS - 3.13 Yatri Sathi shall not be responsible for any cancellation or refusal of provision of Driver Services. 3.14 Yatri Sathi helps Customers to locate Drivers willing to offer the Driver Services. 3.16 The Driver shall be solely responsible and liable for: any failure to complete a ride by the Driver; any failure to pick up Customer(s) at the allotted time and/or place; any act or omission on the part of its Drivers including any rash and negligent driving, verbal, physical or harassment of any nature; for provisioning of services; any violation or non-adherence to the Applicable Law by the Driver; 3.17 The Driver hereby agrees that any complaint/s by Customers regarding the Vehicle or Driver will be liability of the Driver for which Yatri Sathi shall not be responsible in any manner. If there is any serious complaint regarding any particular Vehicle and/or Driver, Yatri Sathi may, in its sole discretion, immediately terminate the Account of such Driver, by providing a notice to Driver to this effect. 4. Payment 4.1 The Company has the discretion to charge any sof ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... required to pay charges to the Driver for the services used by you either by paying cash or through UPI, to the driver directly. The estimated rate of the services shall be notified to You while placing the booking request on the Yatri Sathi App. 10. Limitation of Liability COMPANY SHALL NOT BE LIABLE FOR INDIRECT, INCIDENTAL, SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, INCLUDING LOST PROFITS, LOST DATA, PERSONAL INJURY OR PROPERTY DAMAGE RELATED TO, IN CONNECTION WITH, OR OTHERWISE RESULTING FROM ANY USE OF THE SOFTWARE, EVEN IF COMPANY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. COMPANY SHALL NOT BE LIABLE FOR ANY DAMAGES, LIABILITY OR LOSSES ARISING OUT OF: (i) YOUR USE OF THE SOFTWARE OR APPLICATION OR YOUR INABILITY TO ACCESS OR USE THE SOFTWARE OR APPLICATION; OR (ii) ANY TRANSACTION OR RELATIONSHIP BETWEEN YOU AND DRIVER, EVEN IF COMPANY HAS BEEN ADVISED OF THE POSSIBILITY OF SUCH DAMAGES. COMPANY SHALL NOT BE LIABLE FOR DELAY OR FAILURE IN PERFORMANCE RESULTING FROM CAUSES BEYOND COMPANY S REASONABLE CONTROL. COMPANY S SOFTWARE OR APPLICATION MAY BE USED BY YOU TO FIND TAXIS OF DRIVERS WHO ARE WILLING TO OFFER THEIR SERVICES, AND YOU AGREE THAT COMPANY H ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... se services. The applicant's platform does not engage in the supply of goods or services, a critical requirement for classification as an electronic commerce operator under the aforementioned definitions. This fact is corroborated by the terms and conditions agreed upon with both customers and drivers, wherein the Applicant explicitly disclaims responsibility for the services provided by the drivers, payment processes, or fare determination. The platform operated by the Applicant merely facilitates the sharing of information between drivers and customers, allowing them to connect for transportation services. However, it does not involve the supply of goods or services over an electronic network. 2.12 Also, the applicability of the provisions of Section 9 (5) of the GST Act, 2017, which stipulates that all the provisions of the CGST Act, 2017 shall apply to electronic commerce operator, as if he is the supplier liable to pay tax in relation to the supply of certain services depends on the following conditions namely:- i) The categories of the services shall be specified by notification, on the recommendation of the Council, by the Government. ii) The supply of such specified ser ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in the service provision. 2.14 Therefore, in the present case, the Applicant's platform being only a facilitator between drivers and customers and not being engaged in or control the actual provision of transportation services, the Applicant's platform cannot be categorized as an electronic commerce operator as defined under Section 2 (45) of the GST Act and that the services should not be considered as being supplied through the Applicant's platform in the legal sense intended by the GST Act. 3. Submission of the Revenue The officer concerned from the revenue has express his views as under: 3.1 As per the website of the Yatri Sathi it is stated that Yatri Sathi is the first open network mobility application designed to offer passengers multi-modal services... This application is built on the common network standards defined by ONDC built on the Beckn protocol (open source). Thereby it is settled that the predominant feature of this app is to provide transportation services using electronic platform and digital network. This clearly indicates that without using the app the service the Applicant is supposed to provide, is not possible to reach out its recipients. In othe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... esentatives of the applicant during the course of personal hearing. We have also considered the submission made by the officer concerned from the revenue. The issue before us is to determine the following issues: whether the applicant falls under the purview of the E-commerce Operator as defined in section 2 (45) of the GST Act; whether the applicant shall be deemed to be the service provider under section 9 (5) of the GST Act read with notification no. 17/2021-Central Tax (Rate) dated 18th November, 2021 for the Driver services provided by the Driver to the Customer connected by Yatri Sathi Mobile App ; whether the applicant shall be liable to collect and pay GST on the services supplied by the Drivers (person who subscribed the app) to the Customers (person who subscribed the app) connected through the App. 4.2 Before we delve into the issues, we may first have a look over the relevant legal provision which is as follows: By virtue of Notification No. 17/2017-Central Tax (Rate) dated 28.06.2017 [West Bengal State Notification No. 1141 F.T. dated 28.06.2017] read with sub-section (5) of section 9 of the GST Act and Notification No. 14/2017-Integrated Tax (Rate) dated 28.06.2017,as ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... client/customer i.e. the passenger who books a ride through the App. The applicant does not have role in controlling such quality, price etc. and is by no means involved either directly or indirectly in supply of services. The applicant is not concerned with the collection of the consideration for such supplies. The fare of a journey is paid by the passenger to the driver himself. The only consideration received by the applicant is the registration subscription fees that are received from the account holder i.e. the driver and no other commission or so is received by the applicant from the driver. In this context, the applicant emphasizes on clause 11 of the drivers terms and condition, claiming that the drivers are designated as independent contractors and the relationship between the applicant and the drivers operates on a principal-to-principal basis and not agent. 4.6 The applicant further submits that his role is to provide the platform to connect the driver and the customer where the drivers operate independently, and the applicant does not supervise, manage, or oversee the manner in which the services are rendered. The model provides by the App is registration subscription ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovisions 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. 4.9 It thus appears that any person who is an owner or operator of digital or electronic facility or platform or one who manages such platform for supply of goods or services or both, including digital products i.e. a platform which in common parlance is said to be an electronic commerce platform can be said to be an Electronic Commerce Operator. Admittedly, in the instant case, the applicant is the owner of a digital platform namely the Yatri Sathi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t, gives the meaning that services are to be supplied by means of/by the agency of/from beginning to the end/during the entire period by e-commerce operator. In the instant case, it is observed that the business model promulgated by the applicant is unique where it merely connects the driver and the passenger and their role ends on such connection and effectively does not have any control over the subsequent business activities as the App platform does not collect the consideration and has no control over the actual provision of service by the service provider. The business model of the applicant, as submitted during the course of personal hearing, thus found to be as under: Fare determination: The fares for the ride are established through periodic notifications issued by the State Government, according to the authority granted under Section 67 of the Motor Vehicles Act, 1988. The Company has no role or involvement in the determination of such fares. Payment facilities: The 'Yatri Sathi' app does not specify the payment method by which customers are to pay for services the drivers provide. Invoice: The Driver shall be solely responsible for generating and issuing invoices, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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