Vyavshay mobile platform operator deemed Electronic Commerce Operator liable for GST under Section 9(5) for notified services

The AAR Tamil Nadu ruled that the applicant operating the Vyavshay mobile platform qualifies as an Electronic Commerce Operator under CGST Act 2017, as it owns and manages a digital platform facilitating service supply between partners and end users. The Authority held that Section 9(5) applies to supplies through the platform, making the applicant liable to pay GST as deemed supplier for notified services under N/N. 17/2017, regardless of whether consideration flows directly through the operator, while remaining liable only for app usage charges on non-notified services.

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Issues Involved:

1. Whether the applicant satisfies the definition of an e-commerce operator.
2. Whether the supplies offered over the applicant's platform fall under the ambit of Section 9 (5) of CGST Act, 2017.
3. On which segment of the transaction would the applicant be liable to pay and collect tax.

Summary:

Issue 1: Definition of E-Commerce Operator

The applicant, through its mobile-based digital platform "Vyavshay," connects service providers (partners) with consumers. The platform allows users to book services such as farm equipment, transportation, and skill-based services. The applicant does not take responsibility for the quality or completion of services but charges partners based on app usage. The applicant qualifies as an "Electronic Commerce Operator" (ECO) as per Section 2 (45) of the CGST Act, 2017 because it owns and manages the digital platform facilitating the supply of services.

Issue 2: Applicability of Section 9 (5) of CGST Act, 2017

The applicant argued that they do not fulfill the conditions of being an ECO under Section 9 (5) because the supply of services is not carried on or concluded through their app. However, the ruling clarified that the applicant's platform facilitates the entire service process, from booking to feedback. The applicant retains certain responsibilities and control over the transactions made through the app, thus falling under the ambit of Section 9 (5). The Government's intent, as per Notification No. 17/2017, is to shift the tax liability from small service providers to ECOs to ease compliance burdens.

Issue 3: Tax Liability Segments

The applicant is liable to pay GST on two segments:
1. The amount charged by the applicant towards the usage of the app.
2. The transaction value paid by users for the receipt of notified services under Notification No. 17/2017.

The applicant is deemed to be the supplier of services as per Section 9 (5) of the CGST Act, 2017. For services not notified under Section 9 (5), the applicant is liable to pay GST only on the transaction between the applicant and the partners based on app usage.

Ruling:

1. The applicant satisfies the definition of an e-commerce operator and falls under the nature of supply provided in Section 9 (5) of CGST Act, 2017 r/w notification No 17/2017 dated 28.06.2017.
2. The applicant is liable to pay GST on the amount charged for app usage and the transaction value for notified services. For other services, GST liability is limited to the transaction between the applicant and the partners based on app usage.

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