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2024 (6) TMI 9
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....nt by fraud or suppression of material fads or misrepresentation of facts, shall render such ruling to be void ab initio in accordance with Section 104 of the Act. 1) At the outset, we would like to make it dear that the provisions of both the Central Goods and Services Tax Act and the Tamil Nadu Goods and Services Tax Act are in pari materia, and have the same provisions in like matter and differ from each other only on few specific provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Services Tax Act, 2017 would also mean a reference to the same provisions under the Tamil Nadu Goods and Services Tax Act, 2017. 2) The applicant submitted a copy of challan dated 10.03.2023 evidencing payment of application fees of Rs. 5,000/- each under sub-rule (1) of Rule 104 of CGST Rules 2017 and SGST Rules 2017. The online application form for advance ruling dated 10.03.2023 was physically received on 11.04.2023 as mandated under Rule 107A. 3.1) Balat Enterprises Private Limited (in short 'Applicant') is a Chennai based startup engaged mainly in providing a mobile based digital platform "VYAVSHAY"-busi....
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....nsideration. Moreover, the consideration is charged by the partner (service owner) and other service-related billing directly happens between the partner (service owner) through associates and recipient of the service (customer). Also, if there is any dispute between the supplier of goods or services or both and recipient is purely between them and the applicant is not responsible for tire same. 3.4) The applicant stated that they acts as a mere platform to link and help reach of small business owners with businesses and customers across business verticals, whilst maintaining a digitally safe ecosystem. Any person who provides service can register himself on the app. This platform is designed by the applicant with the motive to generate employment for small entrepreneurs and associates where they can link with consumers, who can book their services and avail such benefits at better rates. The charges are also collected by the applicant from the partners only based on usage of the app. The applicant discharges output GST on the amount received by the partner. Also, there is no other link between the supplier of services and the end consumers with the applicant. The consideration ....
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....d for supply is by the vendor, however, has the logo of the operator is mentioned on the face of the invoice, indicating responsibility of supply. b. Charges such as commission, shipping fees is levied by the operators such commission is calculated on the value of the goods being sold by the vendor to the end customer. c. Collection for all supplies is done by the operator and passed on to the supplier after deduction of appropriate charges and taxes. d. Provide support services. 3.8) The applicant states that thus, in cases of electronic digital platforms such as Amazon, Flipkart, Urban clap and others, e-commerce operators own and manage the supply of services provided by or through it. The supplies on these applications are initiated, carried on, concluded using these apps and also these operators provide details such as status of goods in transit and its logistical locations. On the other hand, "Vyavshay" merely allow a display of the services viable to be supplied by partners / associates and are not involved in collection or take up responsibility for after supplies. 3.9) The applicant also contended that in common parlance, it can be conclude....
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....ransaction no. 1- In this transaction, the charges are collected by the applicant from the partners based on usage of the app. The applicant discharges output GST on the amount received from the partner. B) Transaction no. 2-Another transaction happens between the partner and the end consumer, wherein the partner raises invoice to his customer for services provided & the customer pays directly to the partner. "Vyavshay" merely allows a display of the goods or services viable to be supplied by partners and are not involved in collection or take up any responsibility for supplies. Further the applicant is only providing a platform or facility to the partner and charges based upon the usage of the app and thus their service shall be that of allowing a platform for which a consideration will be charged and thus, the value of supply shall also be the consideration charged as stated in transaction 1 i.e the fixed rate received by the partner based on usage of the app. 3.13) Based on the above interpretation of Laws / Notification the applicant interpreted that are not an e-commerce operator under 9 (5) w.r.t notification no. 17/2017 dated 28.06.2017 of the CGST Act, ....
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....ictional Officer, viz., the Assistant Commissioner (ST), Kelambakkam Assessment Circle, Chennai - 35 replied that on verification of the nature of business activities reported by the applicant, it is opined that, he falls under the definition of e-commerce operator under section 9 (5) of TNGST & CGST Acts, 2017 and the State Jurisdictional officer has also stated that the questions raised by the applicant in the application are not already pending or decided in any proceedings. PERSONAL HEARING 5.0) The applicant, was given an opportunity to be heard on 08.01.2024. Mr Jugal Dushar, Chartered Accountant, Mr Deepak Jain G, Consultant, as the Authorised Representatives (AR) of the Applicant and Mr Prabhat Ranjan, Director appeared for the personal hearing. They reiterated the submissions made in their application and submissions made via email. DISCUSSION AND FINDINGS 6.1) We have carefully considered the submissions made by the applicant in the advance ruling application, the additional submissions made vide email dated 07-12-2023 and the submissions made during the personal hearing. 6.2) The Applicant is before us seeking Advance ruling on the issue whether they satis....
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....and address b. Select the address for which they require services c. Provide the date and time, indicating the booking period for which they want the service d. Based on the availability of Partner (service provider) in their area Vyavshay App will book their service and confirm. e. After confirmation of booking, partner or their representative may call the user for additional information or user may connect with them if required. f. Actual final amount may be different from the estimated price provided earlier. g. The user can give feedback and rate their service at the end of service. 7.3) From the bare reading of the definitions of e-commerce and e-commerce operator it could be inferred that Electronic Commerce Operator (ECO) means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce i.e. for the supply of goods or services or both, including digital products over digital or electronic network. In the instant case, as observed from the facts on record, the applicant owns and manages digital platform ("Vyvashay" APP), for the supply of services. The Partners or Service ....
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....s they wish to sell through the application. The partner of the "APP" enters into business deals/transactions on their own with their clients and business associates supply goods or services or both, the applicant is merely linking partners and end consumers. 8.3) We find that the applicant quoting the provisions of Section 9 (5) of the CGST / SGST Act 2017 has stated that they do not fulfill the conditions of being an electronic commerce operator as the supply of services is not through them and the crucial phrase for the applicability of the Section is "supply of services through e-commerce operator". The applicant submitted that tire Act or Notification doesn't define or clarify the situations of "supply of goods / services through an e-commerce operator" and thus the rules of jurisprudence and interpretation are required to understand the phrase and the word as used in common parlance. The applicant stated that the words "through it" in Section 9 (5) is used to indicate the method under which the supply was initiated, carried on and concluded. 8.4) The applicant also submitted that the dictionary meaning clearly specifies that the word through implies that the supply ....
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....s deemed supplier to collect and pay the tax, in respect of intra-state supply of certain category of services as notified by the Government on the recommendations of the GST Council and the Section 9 (5) is reproduced for ease of reference, as below: Section 9 (5): 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: 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....
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....e can give feedback of customer and rate them after service delivery. The above conditions establishes the fact that the applicant are retaining certain sort of responsibility and hold control over the Vyavshay partner and User, when they utilize the App for the supply of services. From the above sequence of process and the conditions imposed, we are of the view that the e-commerce operator owing to their platform and technology facilitates the service provider to render their service to the consumer at tire door step itself and the said service is being monitored through the App till the completion of service by getting the feedback from the supplier as well as from the recipient of service. 8.10) Further, it is pertinent to mention herein the rule of interpretation observed by the Hon'ble Supreme Court of India, in Civil Appeal No 2684 of 2007, by placing reliance on catena of Judgments, as follows: "in M/s. Hiralal Ratanlal vs. STO, AIR 1973 SC 1034, this Court observed: In construing a statutory provision the first and foremost rule of construction is the literal construction. All that the Court has to see at the very outset is what does the provision say. If....
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....and therefore the meaning of the statute, is primarily to be sought in the words used in the statute itself, which must, if they are plain and unambiguous, be applied as they stand." 8.12) By applying the ratio laid down by the Hon'ble Court stated supra, the case on hand is examined with reference to the relevant provisions of the CGST Act 2017 / TNGST Act 2017, connected Notifications to ascertain the intention of the Government, as below; Section 22 (1) of the Act provides for the Persons liable for registration as follows: Section 22 (1) Every supplier shall be liable to be registered under this Act in the State or Union territory, other than special category States, from where he makes a taxable supply of goods or services or both, if his aggregate turnover in a financial year exceeds twenty lakh rupees: 8.13) Section 24 of the CGST Act 2017/ TNGST Act 2017, mandates certain categories of persons to obtain compulsory registration, irrespective of the threshold limit for aggregate turnover mentioned under Section 22 (1) of the Act. It shall be taken into account that sub-section (ix) of Section 24, which mandates the compulsory registration of person....
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.... from the Service providers, for such category of Services notified under Section 9 (5) of the Central Goods and Services Tax Act, 2017. 8.16) By following the principle laid down by the Hon hie Apex Court, to ascertain the intention of the legislature in fixing the liability on the E-Commerce Operator instead of the small service providers, it will be appropriate to mention the Statement of Object and Reason herein viz "the proposal, justification of the proposal and the recommendations of the fitment committee" before the 20th GST Council Meeting, to bring the house-keeping services such as plumbing, carpentering etc, within the beneficial sweep of Section 9 (5), to facilitate and promote the small service providers, which are extracted as below, from the Official web site of the GST Council: SI.No. Proposal Justification for proposal Recommendations of the Fitment Committee 1 Services of Plumber, Carpenter etc. may be added in the aggregator model It shall ease compliance burden on small service providers May be accepted. Liability to pay GST in case of accommodation service provide by small service providers such as home stays having annual turnove....
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....ire transaction process. Hence we can see that though the "partners" are the actual service providers, the applicant through the app is not only involved in linking the service users / customers and the service providers / "partners" but also facilitating booking of the required services, tracking service delivery personnel in real time and confirmation of payment to the "associates". 8.19) We find that the applicant has also made submissions that in cases of electronic digital platforms such as Amazon, Flipkart, Urban clap and others, though the invoices issued for supply is by the vendor the logo of the operator is mentioned on the face of the invoice, indicating responsibility of supply. That charges such as commission, shipping fees is levied by the operators -such commission is calculated on the value of the goods being sold by the vendor to the end customer and collection for all supplies is done by the operator and passed on to the supplier after deduction of appropriate charges and taxes. However we find that the above submissions do not come to the rescue of the applicant. In this regard we reproduce a FAQ on E-commerce provided by the Central Board of Indirect taxes; ....
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....supply of such services alone qualify for shifting tax burden from supplier to E-Commerce Operator. In all other cases, supplier has to discharge the tax liability as per the provisions of the GST Act. 8.21) In this case, the applicant facilitates the supply flow from the supplier to the customer and the applicant takes responsibility on such supplies carried through their App and specifically excludes themselves from any responsibility if there is any off line supply takes place between the supplier and customer. The clauses 4.3 and 4.4 found in the "Terms of Use-Vyavshay User and Vyavshay partner" respectively, as discussed in para 8.9, would otherwise, show that the responsibility of the supply made through App lies with the applicant and therefore, the applicant cannot disown their liability cast upon them u/s 9 (5) for the services notified in Notn. No. 17/2017. If their contention is taken as the correct legal stand, then the very basic intention of the GST Council and Parliament/ State legislature would fail, as the small service provider would again face the rigor of compliance burden under the GST law and procedures. This is not the object of the legislation and hence, ....
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....ECOs are providing bundle of services, they are an independent supplier of service and service provided by an independent supplier is only one facet of bundle of services assured by ECOs to consumer. 8.23) From the above ruling it can be seen that the treatment of tax is different for the same supplies when made through E-commerce Operator. We reiterate that in the instant case, the supplies are made through the applicant's app "Vyavshay" and the provisions of Section 9 (5) of the CGST Act 2017/ TNGST Act 2017 are very much applicable to the applicant. 8.24) In view of the above discussions we find that the applicant squarely falls under the ambit of Section 9 (5) of the CGST Act 2017/ TNGST Act 2017 w.r.to notification no. 17/2017 dated 28.06.2017. Hence, with regard to the segment of transaction on which the applicant is liable to pay tax we find that the applicant has to pay tax on the amount charged by the applicant towards the usage of the app as well as on the transaction value as sole consideration in terms of Section 15 of the Act, paid by the users towards receipt of supply of notified services under the Notification No.17/2017-Central Tax (Rate) dated 28.06.2017....