Tax implications for various services in the transportation industry clarified by recent ruling

The authority ruled that the various supplies by the applicant, vehicle owner, driver, and associate partner do not qualify as a composite supply. Pick-up charges are subject to a 5% GST rate. Services provided by the associate partner are subject to an 18% GST rate if registered under GST. Bidding charges, service charges on the goodwill bonus, and trip cancellation charges attract an 18% GST rate. Insurance charges do not constitute a composite supply. Collecting GST at 5% on fare does not fully comply with GST rules; 18% GST must be discharged on other incomes.

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Issues Involved:
1. Composite Supply Qualification
2. GST Rate on Pick-up Charges
3. Service Supply Between Applicant and Associate Partner
4. GST Rate on Bidding Charges
5. GST on Goodwill Bonus Service Charges
6. GST on Trip Cancellation Charges
7. Composite Supply on Insurance Charges
8. Compliance with GST Rules on Collected GST

Detailed Analysis:

1. Composite Supply Qualification:
The applicant sought clarity on whether the various supplies by the applicant, vehicle owner, driver, and associate partner together qualify as 'Composite Supply'. According to Section 2(30) of the CGST Act, 2017, a composite supply involves two or more taxable supplies naturally bundled and supplied together in the ordinary course of business. The authority concluded that the applicant's services, including providing an online platform and optional insurance, are not naturally bundled and thus do not qualify as a composite supply.

2. GST Rate on Pick-up Charges:
The applicant questioned if the pick-up charges paid to the owner/driver fall under the GST rate of 5%. The authority noted that the pick-up service is incidental to the main service of passenger transportation by radio taxi. As per Section 9(5) of the CGST Act, 2017, the applicant, as an e-commerce operator, is liable to pay GST on such services. Therefore, the pick-up charges are subject to a GST rate of 5%.

3. Service Supply Between Applicant and Associate Partner:
The applicant inquired whether any supply of service exists between the applicant/aggregator and the associate partner and the applicable GST rate. The associate partner provides support services to the applicant, including onboarding and managing passengers and drivers. These services are not part of the transportation service and thus are not covered under Section 9(5) of the CGST Act, 2017. The authority ruled that the associate partner's services are subject to an 18% GST rate if the associate partner is registered under GST. If not registered, no GST is applicable.

4. GST Rate on Bidding Charges:
The applicant sought clarification on the GST rate for the amount received from drivers/owners towards bidding. The authority determined that bidding charges are not related to the transportation service provided by the driver to the passenger. These charges fall under "other support services" and are subject to an 18% GST rate as per Notification No. 11/2017-Central Tax (Rate).

5. GST on Goodwill Bonus Service Charges:
The applicant queried if the service charges collected on the goodwill bonus paid by passengers to drivers attract GST. The authority found that the service charge collected for facilitating the payment of the goodwill bonus is considered a supply of service and is liable for GST at 18%.

6. GST on Trip Cancellation Charges:
The applicant asked whether cancellation charges attract GST liability. The authority ruled that the activity of tolerating trip cancellations for a consideration is a supply of service under clause (e) of para 5 of Schedule II of the CGST Act, 2017, and attracts an 18% GST rate.

7. Composite Supply on Insurance Charges:
The applicant questioned if the charges for insurance come under composite supply. The authority observed that insurance coverage is optional for passengers and not naturally bundled with the transportation service. Therefore, insurance charges do not constitute a composite supply.

8. Compliance with GST Rules on Collected GST:
The applicant sought confirmation on whether collecting GST at 5% on fare from passengers complies with GST rules. The authority clarified that while 5% GST is applicable on the basic fare, the applicant must pay 18% GST on other incomes as discussed in the preceding paragraphs.

RULING:
1. The various supplies do not qualify as a composite supply.
2. Pick-up charges fall under a 5% GST rate.
3. Services provided by the associate partner to the applicant attract an 18% GST rate if registered under GST.
4. Bidding charges are subject to an 18% GST rate.
5. Service charges on the goodwill bonus attract an 18% GST rate.
6. Cancellation charges attract an 18% GST rate.
7. Insurance charges do not constitute a composite supply.
8. Collecting GST at 5% on fare does not fully comply with GST rules; 18% GST must be discharged on other incomes.

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