WHEN THE PLATFORM PAYS — UNDERSTANDING SECTION 9(5) OF THE CGST ACT

The Conceptual Framework — From Supplier Liability to Operator-Based Taxation

Goods and Services Tax (GST) is an indirect tax in which the economic burden is ultimately borne by the recipient, while the statutory obligation to deposit tax with the Government ordinarily rests upon the supplier. This foundational structure ensures administrative efficiency while allowing tax incidence to flow along the supply chain.

However, the Legislature has carved out specific exceptions. Under Sections 9(3) and 9(4), liability may shift to the recipient under reverse charge. Section 9(5) introduces a distinct third model, under which tax is paid not by the actual supplier or the recipient, but by the Electronic Commerce Operator (ECO) through whom specified services are supplied.

The Legislative Design and Deeming Fiction under Section 9(5)

Section 9(5) of the CGST Act, 2017 provides:

“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.”

Section 5(5) of the IGST Act, 2017 contains an identical provision in respect of inter-State supplies.

The above provision creates a deliberate statutory deeming fiction whereby the Electronic Commerce Operator is treated “as if” it were the supplier for the limited purpose of payment of tax. In the ordinary course, GST is payable by the person who actually supplies the service. However, in respect of notified services supplied through a digital platform, the liability to discharge tax shifts from the fragmented individual supplier to the organised technological intermediary.  The underlying supply relationship does not change — the real supplier continues to render the service and the recipient continues to consume it — yet, for compliance purposes, the law centralises tax responsibility at the platform level.

This mechanism reflects administrative pragmatism in a digital economy. Where services are rendered by thousands of small, geographically dispersed providers operating through structured electronic platforms, enforcement at the individual level may be impractical. By imposing liability on the ECO, the law ensures traceability, technological oversight, and consolidated compliance, while preserving the broader input tax credit architecture where applicable. Section 9(5), therefore, represents neither a conventional forward charge nor a classical reverse charge; it is, in substance, a legislatively engineered operator-based tax collection model designed to align taxation with the realities of platform-driven commerce.

Registration Implications under the ECO Regime — The Overriding Effect of Section 23(2)

At first reading, Section 24(i) of the CGST Act, 2017 appears absolute and uncompromising. It mandates compulsory registration for every person making taxable supplies through an Electronic Commerce Operator (ECO) who is required to collect tax at source under Section 52. The provision does not refer to any turnover threshold. Therefore, a literal reading creates the impression that even the smallest supplier providing services through an ECO must obtain GST registration, irrespective of the value of supplies.

However, the statutory scheme does not end with Section 24. A significant and often overlooked relaxation was introduced through Notification No. 06/2019–Central Tax dated 29.01.2019, issued in exercise of powers under Section 23(2) of the CGST Act, 2017. This notification exempts persons making supplies of services through an ECO (who is required to collect TCS under Section 52) from obtaining registration, provided their aggregate turnover does not exceed Rs.20 lakh in normal States or Rs.10 lakh in specified Special Category States.

The real legal strength of this exemption lies in the opening words of Section 23(2), which begin with a non-obstante clause: “Notwithstanding anything to the contrary contained in sub-section (1) of Section 22 or Section 24…”. These words are not ornamental. They are decisive. A non-obstante clause is a legislative device used to give overriding effect to a provision. It means that even if Section 24 mandates compulsory registration, Section 23(2) empowers the Government to grant an exemption and, once such an exemption is notified, Section 24 cannot override it.

Thus, while Section 24(i) creates a general rule of compulsory registration for persons supplying through an ECO, Section 23(2) carves out a specific exception. Notification No. 06/2019 operationalises that exception. The result is that a small service provider—such as a tutor, beautician, repair technician, or freelance professional—supplying services through an ECO is not required to obtain GST registration, provided that the aggregate turnover remains within the prescribed threshold. The fact that the ECO collects tax at source under Section 52 does not, by itself, trigger mandatory registration in such cases.

It is equally important to note that this relaxation applies only to service providers. Suppliers of goods through an ECO do not enjoy this exemption and continue to be governed by the compulsory registration requirement under Section 24, subject to other applicable provisions.

Presently Notified Sectors under Section 9(5)

At present, the notified services broadly fall within three principal sectors: mobility services facilitated through ride-hailing platforms; hospitality and short-term accommodation services supplied through digital aggregators; and specified household and restaurant services supplied through electronic commerce operators. Each category has evolved through notifications issued on the recommendation of the GST Council and must be understood in its precise statutory and notification-based context. The present legal position in respect of these sectors is examined below.

Mobility Sector — Passenger Transportation

(A) Transportation of Passengers by Radio-Taxi, Motor Cab, Maxicab, Motor Cycle, etc. (Other than Omnibus)

Relevant Notification:
Notification No. 17/2017-CT (Rate) dated 28.06.2017, as amended by Notification No. 16/2023-CT (Rate) dated 19.10.2023.
(Parallel IGST Notification No. 14/2017-IT (Rate), as amended by Notification No. 16/2023-IT (Rate))

The notified description of services reads:

“Services by way of transportation of passengers by a radio-taxi, motor cab, maxicab, motor cycle, or any other motor vehicle except omnibus.”

Whenever such services are supplied through an Electronic Commerce Operator (ECO), GST is payable by the ECO in terms of Section 9(5) of the CGST Act, 2017.

Understanding the Key Expressions Used in the Notification

The notification uses terms that are not casual expressions but legally defined categories under the Motor Vehicles law. Unless these are understood correctly, confusion may arise regarding scope.

A “motor cab” is defined under Section 2(25) of the Motor Vehicles Act, 1988 as any motor vehicle constructed or adapted to carry not more than six passengers excluding the driver for hire or reward. This includes typical small taxis — such as standard city cabs — that carry up to six passengers, excluding the driver.

A “maxicab”, under Section 2(22) of the Motor Vehicles Act, means a motor vehicle constructed or adapted to carry more than six passengers but not more than twelve passengers excluding the driver, for hire or reward. In practical terms, this includes larger passenger vehicles, such as tempo travellers or vans, used for group travel.

A “radio-taxi” in terms of   Explanation (a) to N. No. 17/2017-CT(R) (28.06.2017)/Paragraph 2(zk) to services exemption N. No. 12/2017-CT(R) (28.06.2017) means a taxi, including a radio cab, by whatever name called, which is in two-way radio communication with a central control office and is enabled for tracking using Global Positioning System (GPS) or General Packet Radio Service (GPRS). In common understanding, app-based cabs fall within this category.

A “motor cycle” is defined under Section 2(27) of the Motor Vehicles Act as a two-wheeled motor vehicle, inclusive of any detachable side car. Thus, bike-taxi services facilitated through digital platforms fall squarely within this description.

The notification specifically excludes an “omnibus”, which under Section 2(29) of the Motor Vehicles Act refers to a motor vehicle constructed or adapted to carry more than six passengers, excluding the driver. However, in commercial usage, the term commonly refers to large buses operating on fixed routes.

Thus, in simplified terms, the notification covers small and medium passenger vehicles used for point-to-point passenger transport — including taxis, app-based cabs, bike taxis, and small-group vans — when such services are provided through a digital platform. It does not extend to large bus operations or traditional omnibus services.

Thus, when a passenger books a ride through a mobile application operated by an ECO, the driver physically performs the transport service. However, for GST purposes, the platform is treated as the deemed supplier and becomes liable to discharge tax. If the same transport service is provided independently — for example, a taxi hired directly without booking through an electronic platform — Section 9(5) does not apply, and the normal forward charge provisions govern the transaction. The tax liability does not arise merely because a taxi service is provided. It arises because such service is supplied through an ECO.

Rate Structure and Input Tax Credit Implications

The rate applicable to passenger transport services by motor cab, radio-taxi, or similar vehicles is ordinarily 5% (2.5% CGST + 2.5% SGST), subject to the condition that input tax credit (ITC) on goods and services used in supplying the service is not taken, barring the ITC of input services in the same line of business. Alternatively, a higher rate of 12% may be applicable where full ITC is availed. This optional rate structure has significant compliance implications.

When such services are supplied through an ECO under Section 9(5), the ECO steps into the shoes of the supplier for the limited purpose of tax payment. Accordingly, the ECO must discharge GST at the applicable rate — typically 5% without ITC in most app-based passenger transport models. Drivers or small service providers operating through the platform do not separately discharge GST on such rides, as the statutory liability is shifted to the operator.

It is crucial to appreciate that the concessional 5% rate is generally subject to the condition of non-availment of ITC on inputs and input services used in supplying the service, except for the ITC of input services in the same line of business. Since the ECO is deemed the supplier for tax payment purposes, the ITC restrictions apply at the operator level. This ensures uniformity in taxation and avoids dual credit claims across the supply chain. If the service is supplied independently and not through an ECO, the normal forward charge provisions apply, and the actual supplier must examine the rate and ITC conditions accordingly.

Illustration 1:

Jyoti Arora books a cab through a digital platform.
Fare charged: Rs.1,000
Applicable GST rate: 5%

The platform collects Rs.1,050 from Jyoti Arora and deposits Rs.50 with the Government. The driver does not separately account for GST on that ride supplied through the ECO. The ECO bears statutory responsibility under Section 9(5), while the driver continues to perform the actual transport service.

From Fragmented Drivers to Structured Compliance

This model demonstrates how Section 9(5) integrates with the concessional rate structure to achieve administrative efficiency. Thousands of small drivers, who may otherwise fall below threshold limits or operate in an unorganised manner, are brought within the tax net through the platform's centralised compliance. At the same time, the concessional 5% rate ensures that passenger transport remains affordable while preserving revenue certainty.

(B) Transportation of Passengers by an Omnibus

Relevant Notification:
Notification No. 17/2017-CT (Rate) dated 28.06.2017, as amended by Notification No. 16/2023-CT (Rate) dated 19.10.2023 and Notification No. 19/2023-IT (Rate) dated 19.10.2023.

The notified description of services reads:

“Services by way of transportation of passengers by an omnibus except where the person supplying such service through electronic commerce operator is a company.”

As discussed earlier, an omnibus refers to a motor vehicle constructed or adapted to carry more than six passengers, excluding the driver. The present entry, therefore, covers passenger transportation services provided through buses and similar large-capacity vehicles when such services are supplied through an Electronic Commerce Operator (ECO).

Unlike the earlier category, this entry introduces a deliberate structural distinction based on the supplier's legal status. The mechanism under Section 9(5) does not apply uniformly to all omnibus operators. Instead, liability shifts depending upon whether the supplier is a company.

Where the omnibus operator is an individual, proprietary concern, partnership firm, or any non-corporate entity, and tickets are supplied through an ECO, the ECO becomes liable to pay GST. In such cases, the platform remits tax as if it were the supplier, thereby facilitating compliance for small and medium bus operators that may not possess advanced compliance systems.

However, the statutory exception becomes operative when the supplier is a company. The words “except where the person supplying such service through electronic commerce operator is a company” carve out a clear exclusion from the Section 9(5) framework. In such situations, the company itself is required to discharge GST under the forward charge mechanism, notwithstanding that tickets are sold through an ECO.

This distinction is neither accidental nor cosmetic. It reflects calibrated legislative design. Smaller and non-corporate operators are relieved from the procedural burden of tax payment when operating through digital platforms, whereas corporate operators — equipped with structured accounting and compliance mechanisms — are expected to discharge tax directly. At the same time, this ensures the seamless flow of input tax credit within the corporate ecosystem.

Illustration 2:

Anish Kapoor is a small individual bus operator who lists tickets on an online platform. Ticket value is Rs.600. GST is collected and deposited by the platform. If a Private Limited Company operating buses lists tickets on the same platform, the company itself is liable for GST.

The omnibus entry, therefore, differentiates liability based on organisational structure. Smaller operators benefit from platform-level compliance, whereas corporate entities continue under forward charge, ensuring structural coherence within larger transport enterprises.

III. Hospitality & Accommodation Sector

Relevant Notification:
Notification No. 17/2017-CT (Rate) dated 28.06.2017.
(Parallel IGST Notification No. 14/2017-IT (Rate)).

The notified description reads:

“Services by way of providing accommodation in hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes, except where the person supplying such service through electronic commerce operator is liable for registration under section 22(1) of the CGST Act.”

This entry concerns accommodation services supplied through an Electronic Commerce Operator (ECO), including online hotel booking platforms. The description may appear lengthy, but its operational logic is straightforward upon careful analysis.

The key to understanding this provision lies in the phrase “except where the person supplying such service through electronic commerce operator is liable for registration under section 22(1).”Section 22(1) of the CGST Act prescribes the threshold for mandatory registration based on aggregate turnover. Therefore, the liability mechanism under Section 9(5) applies only where the accommodation provider is not required to obtain registration under Section 22(1).

In simple terms, if a small hotel, guest house, or lodging facility has turnover below the prescribed threshold limit and supplies rooms through an ECO, the ECO is liable to pay GST on such supplies. The small accommodation provider is not required to obtain GST registration merely because bookings are made through an online platform. The tax is collected and deposited by the platform itself. However, once the accommodation provider crosses the registration threshold under Section 22(1), the position changes. In that situation, the supplier becomes liable to obtain registration and discharge GST under the normal forward charge mechanism. The ECO does not assume the role of the supplier for tax payment purposes. Thus, the applicability of Section 9(5) in this entry is conditional and turnover-dependent.

This design reflects a deliberate compliance policy. Small guest houses, homestays, and local lodging providers often depend on digital platforms for visibility and bookings. Requiring each such small operator to maintain full GST compliance merely because bookings are routed through an ECO would create disproportionate procedural burden. The law, therefore, centralises tax payment at the platform level for such small suppliers. At the same time, once the supplier attains scale and crosses the statutory threshold, the ordinary GST framework applies.

Illustration 3:

Swagat operates a small guest house whose aggregate turnover remains below the registration threshold. He lists rooms at Rs.2,200 per day. The customer pays the amount, inclusive of GST, via the portal. In this case, the ECO deposits the GST with the Government. The guest house owner is not required to obtain GST registration solely because bookings are made through the portal.

Thus, the accommodation framework introduces a turnover-sensitive mechanism. Platform-level tax payment applies only until the supplier attains statutory registration status; thereafter, the ordinary GST structure resumes. Liability here is directly linked to economic scale.

IV. Household & Restaurant Services

(A) Housekeeping Services

Relevant Notification:
Notification No. 23/2017-CT (Rate) dated 22.08.2017.
(Parallel IGST Notification No. 23/2017-IT (Rate)).

The notified description of services reads:

“Services by way of housekeeping, such as plumbing, carpentering etc., except where the person supplying such service through electronic commerce operator is liable for registration under section 22(1) of the CGST Act.”

This entry covers household services commonly provided through digital platforms, including plumbing, carpentry, electrical repairs, cleaning, and similar domestic services. These services are typically provided by numerous small and individual service providers who rely on mobile applications and aggregator platforms to connect with customers.

The determining factor is whether the service provider is liable for registration under Section 22(1). Where the household service provider is not liable for registration under Section 22(1), the ECO becomes liable to discharge GST under Section 9(5). Once the supplier crosses the threshold, liability shifts back under the forward charge.

This structure reflects a conscious compliance strategy. Household services constitute a highly fragmented and informal sector, consisting largely of microservice providers. Centralising tax payment at the platform level ensures revenue visibility and administrative efficiency, while protecting small service providers from procedural complexity. At the same time, once the supplier attains scale, the regular GST framework applies without distortion.

Illustration 4:

A plumbing service is booked through a mobile application for Rs.1,500. GST @ 18% applies. The platform collects Rs.1,770 and deposits Rs.270 as GST. The plumber does not separately account for GST on that supply, provided he is not liable for registration under Section 22(1).

Thus, in the household services segment, Section 9(5) provides practical compliance support to thousands of micro service providers operating through digital platforms. The model reduces administrative friction while maintaining revenue visibility in an otherwise informal sector.

(B) Supply of Restaurant Service (Other than Specified Premises)

Relevant Notification:
Notification No. 17/2017-CT (Rate) dated 28.06.2017, as amended by Notification No. 17/2021-CT (Rate) dated 18.11.2021.

The notified description of services reads:

“Supply of restaurant service other than the services supplied by restaurant, eating joints etc. located at specified premises.”

Thus, where restaurant services are supplied through an ECO, GST is payable by the ECO, except where the restaurant is located in “specified premises”.

The expression “specified premises” has the meaning assigned in clause (xxxvi) of paragraph 4 of Notification No. 11/2017-CT (Rate) dated 28.06.2017, as amended by Notification No. 05/2025-CT (Rate) dated 16.01.2025.

As per the said notification, “specified premises”, for a financial year, means —

(a) a premises from where the supplier has provided in the preceding financial year hotel accommodation service having the value of supply of any unit of accommodation above Rs.7,500 per unit per day or equivalent; or

(b) a premises for which a registered person supplying hotel accommodation service has filed a declaration between 1st January and 31st March of the preceding financial year declaring it to be a specified premises; or

(c) a premises for which a person applying for registration has filed a declaration within fifteen days of obtaining acknowledgement for registration, declaring it to be a specified premises.

Policy Rationale

Restaurants operating as standalone establishments and supplying through digital platforms are generally covered under the Section 9(5) framework. However, restaurants situated within specified premises form part of a larger hospitality structure that typically avails input tax credit on multiple inward supplies, including goods and services used in hotel operations. If GST liability in such cases were shifted to the ECO, it could disrupt the continuity of the input tax credit chain and create inconsistencies within the integrated hotel business model. The exclusion of specified premises, therefore, ensures that such establishments remain under forward charge, thereby preserving credit integrity within structured hospitality enterprises.

Illustration 5:

Aayra Kapoor orders food valued at Rs.1,000 via a delivery platform from a standalone restaurant. The platform collects GST and deposits it. If the order is placed from a restaurant located on specified premises, the restaurant itself is liable for GST.

From Aggregation to Accountability — The Philosophy of Section 9(5)

Section 9(5) is more than a technical charging provision. It is a legislative response to the realities of a platform-driven economy. In an era where services are no longer confined to physical establishments but are mediated through digital interfaces, the law has consciously shifted from supplier-centric taxation to system-centric accountability. By placing tax responsibility on the Electronic Commerce Operator in specified sectors, the statute recognises that technology is not merely a facilitator of commerce — it is an enabler of compliance. At the same time, the framework carefully preserves the integrity of credit for structured enterprises and protects small service providers from disproportionate procedural burdens.Section 9(5), therefore, represents a quiet but significant evolution in indirect tax design — one that aligns taxation with technological architecture, administrative efficiency, and economic scale. It demonstrates how the GST regime adapts, not reactively, but thoughtfully, to the digital transformation of commerce.

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CA. RAJ JAGGI AND KIRTI JAGGI