2024 (10) TMI 194 - AAR - GST

Yatri Sathi Mobile App exempt from collecting GST on driver services under section 9(5) despite qualifying as E-commerce Operator

The AAR, West Bengal ruled that while the applicant operating Yatri Sathi Mobile App qualifies as an E-commerce Operator under section 2(45) of the GST ... Electronic commerce operator - electronic commerce - services supplied through - liability under section 9(5) of the GST Act - radio taxiElectronic commerce operator - electronic commerce - Applicant fits within the definition of an electronic commerce operator under section 2(45) of the GST Act. - HELD THAT: - The Authority examined the statutory definitions of electronic commerce and electronic commerce operator and the admitted facts that the applicant owns, operates and manages the Yatri Sathi digital platform which enables supply of transport services by connecting drivers and passengers. The applicant also provides use of the digital platform to drivers for consideration (subscription fees). On the conjoint reading, the applicant satisfies the requirement of owning/operating/managing a digital facility for electronic commerce and therefore falls within the definition of an electronic commerce operator. [Paras 4]Applicant qualifies as an electronic commerce operator under section 2(45) of the GST Act.Services supplied through - liability under section 9(5) of the GST Act - Supply of passenger-transport services by drivers through the Yatri Sathi App is not a supply made by the applicant; the services are not supplied 'through' the applicant for purposes of section 9(5). - HELD THAT: - Having held that the applicant is an electronic commerce operator, the Authority turned to section 9(5) which makes an ECO liable where specified services are supplied 'through' it. The Authority analysed the meaning and implications of the word 'through' and considered the applicant's business model and contractual terms: drivers contract directly with passengers, determine fares as per State notifications, collect payments directly, issue invoices themselves, and the applicant only provides a subscription-based platform and disclaims control over service quality, fare determination, invoicing and payment collection. These features show that the supply of transport services is independent in nature and not effected by the applicant acting as more than a passive facilitator. On that basis, the Authority concluded that the necessary condition of the service being supplied 'through' the electronic commerce operator, as envisaged by section 9(5), is not satisfied in the present facts. [Paras 4]Supply by drivers through the App does not amount to supply by the applicant and therefore is not a supply 'through' the electronic commerce operator for section 9(5) purposes.Liability under section 9(5) of the GST Act - services supplied through - Applicant is not liable to collect and pay GST under section 9(5) of the GST Act for the drivers' passenger-transport services supplied via the App. - HELD THAT: - Because the Authority found that the supply of passenger-transport services by drivers is not made 'through' the applicant in the sense required by section 9(5), the statutory deeming and attendant tax liabilities imposed on an electronic commerce operator by notification under section 9(5) do not arise. The applicant therefore does not satisfy the conditions for discharging tax liability as an electronic commerce operator in respect of the drivers' services. [Paras 4]Applicant is not the person liable to discharge tax under section 9(5) of the GST Act in respect of the drivers' passenger-transport services.Final Conclusion: The Authority ruled that the applicant qualifies as an electronic commerce operator but, on the facts and contractual model before it, the passenger-transport services provided by drivers via the Yatri Sathi App are not supplied 'through' the applicant for the purposes of section 9(5); consequently the applicant is not liable to collect and pay GST under section 9(5) in respect of those services. Issues Involved:1. Whether the applicant falls under the purview of the E-commerce Operator as defined in section 2 (45) of the GST Act.2. Whether the applicant shall be deemed to be the service provider under section 9 (5) of the GST Act for the Driver services provided through the 'Yatri Sathi Mobile App.'3. Whether the applicant is liable to collect and pay GST on the services supplied by the Drivers to the Customers connected through the App.Issue-wise Detailed Analysis:1. E-commerce Operator Classification:The applicant is a society registered under the West Bengal Societies Registration Act, 1961, engaged in developing a ride-hailing platform named 'Yatri Sathi Mobile App.' The primary question is whether the applicant qualifies as an E-commerce Operator under section 2 (45) of the GST Act. The definition of an E-commerce Operator includes any person who owns, operates, or manages a digital or electronic facility or platform for electronic commerce. The applicant owns and manages the 'Yatri Sathi' platform, which connects drivers and customers for transportation services. Despite the applicant's argument that it only facilitates connections and does not engage in the supply of services, the authority concluded that the applicant fits the definition of an E-commerce Operator as it owns and operates the digital platform for electronic commerce.2. Service Provider under Section 9 (5):Section 9 (5) of the GST Act mandates that the tax on specified services supplied through an electronic commerce operator shall be paid by the operator as if they are the supplier. The applicant argued that it merely connects drivers and passengers without controlling the actual service provision, thus not qualifying as a service provider under this section. The authority examined the nature of the applicant's role and found that the applicant does not have significant involvement in the processes of booking, payment handling, or ensuring service delivery, which are essential to be considered as supplying services 'through' the platform. Consequently, the authority ruled that the supply by the service provider (driver) to his customers (passengers) through the Yatri Sathi App does not amount to supply by the applicant, and thus, the applicant is not deemed to be the service provider under section 9 (5).3. GST Liability on Services Supplied:The final issue is whether the applicant is liable to collect and pay GST on services supplied by the drivers to the customers through the App. The authority evaluated the business model, noting that the applicant does not determine fares, collect payments, or exert control over the service quality. The applicant operates on a subscription-based model without charging commission fees, and the drivers are responsible for collecting fares directly from customers. Since the applicant does not satisfy the conditions of Section 9 (5) for discharging tax liability as an electronic commerce operator, it is not liable for GST on the services supplied by the drivers. Therefore, the applicant is not responsible for collecting and paying GST under section 9 (5) of the GST Act.Conclusion:The authority ruled that while the applicant qualifies as an E-commerce Operator, it is not deemed to be the service provider under section 9 (5) for the driver services facilitated through its platform. Consequently, the applicant is not liable to collect and pay GST on the services supplied by the drivers to the customers through the App.