TaxTMI 
TaxTMI 
2024 (7) TMI 1505
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.... to their end users for booking two-wheelers and three-wheeler passenger transport services offered by third party drivers by means of the company website and its mobile app platform "Rapido". The applicant proposes to introduce computer/mobile application services to independent four-wheeler cab service providers on subscription basis, as a discovery platform to enable them to connect with potential end-users (also referred to as passengers, who require the services of such third party drivers on its platform. The third party drivers/subscribers) shall enter into a standard agreement to create a business user account, on furnishing certain documents, which shall be limited to providing of license or permission to use the said app. The applicant also proposes to introduce pay per use ride monitoring fee, which is an optional service provided to the passengers, to ensure the passenger's safety during the ride that the passenger avails from the four-wheeler cab service providers. 3. In view of the above, the applicant has sought advance ruling in respect of the following questions:- a. Whether the Applicant satisfies the definition of an e-commerce operator and the nat....
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....vices of such third party drivers ("subscribers") on their platform. The drivers shall register with the app, enter into a standard agreement and have a business user account that provides license or permission to use the said app. 5.2 The Applicant submitted that in their proposed model, the independent four wheeler cab service provider shall become a subscriber to the app and the relationship between the members and the passenger would be of supplier and recipient and any monetary consideration involved between them is purely privy to their contract and the applicant in no way connected with such contract; If there is any dispute between the members registered on the App and the passengers, it is purely between them, and the applicant would not be responsible; the App, with a commission free monetization model, is a service provider's hub wherein they have absolute ownership of their supply, and the applicant has no rights or say or control over the supply and there is no involvement of the applicant in the supply of services from the members registered on the App as well as arranging for collection of any consideration or any other form of agreed means of payment from the pas....
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....y transaction with the passenger. The app acts as a discovery platform to enable its app for passengers to look for drivers and drivers to offer their services to passengers without getting into acting as an intermediary for, or and on behalf of either of the sides to the transaction. There is no Settlement to driver by the company at all. There is no collection of money from any passenger on behalf of the driver. Therefore, there is no concept of settlement to the driver at all. The driver pays the subscription charges on which the GST is paid. The consideration payable by the user to the driver is paid directly and not through the company at all. The company does not collect any money from a passenger which is owed to the driver at all. It therefor is pertinent to say that the company is not in the space of collecting any money on behalf of the driver. Treatment of supply through e-com The App is meant as a pure discovery platform to enable driver to provide services to the users and the company doesn't provide the mobility services. It is the driver who provides the supply by himself and not through Ute app. It is therefore submitted that the company does not provide....
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....th Nov 2017 6.2 The principal charging provisions are section 9 (1) of the CGST/KGST Act 2017 & Section 5 (1) of the IGST Act 2017 and in terms of said sections the liability to pay tax on "outward" taxable supplies of goods or services or both, as the case may be, is on the "supplier". Section 2 (105) defines the expression "supplier", in relation to any goods or services or both which shall mean the person supplying the said goods or services or both and shall include an agent acting as such on behalf of such supplier in relation to the goods or services or both supplied. 6.3 The taxable supplies effected by the subscribers of the app platform of the applicant to their passengers by using the applicant's app platform, the suppliers for the purpose of CGST/KGST/IGST Acts are the subscribers of the app platform and not the applicant and therefore, the liability to pay tax on the value of all such supplies is on the respective suppliers and certainly not on the applicant. Further the provisions of Section 9 (1) of the CGST /KGST Act and Section 5 (1) of the IGST Act are not subject to Section 9 (5) and Section 5 (5) of the said acts respectively. 6.4 The definitions of the ....
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....on 9 (5) of the CGST Act 2017 r/w notification No. 17/2017 dated 28.06.2017, notification No. 23/2017 dated 22.08.2017 and notification No 17/2021 dated 18.11.2021 does not contemplate or envisaged noninterfering and commission free business adopted by the applicant. It is applicable to business model which collects payment on behalf of the supplier. As the applicant does not propose to collect any payment on behalf of the supplier the question of collecting tax on behalf of the supplier cannot arise. Hence, the applicant would not be liable for the GST on the transaction earned on by the cab provider with his passenger. Moreover, the supplier raises invoice to his passenger & the passenger pays directly to the cab service provider which rules out any attempt on the part of the applicant to pay taxes of the supplier. 6.8 On a joint reading of the definitions of 'electronic commerce' and 'electronic commerce operator' in terms of Sections 2 (44) and 2 (45) respectively. Section 9 (5) of the CGST Act 2017 and Notification No 17/2017-Central Tax (Rate) dated 28.06.2017 wherein it is notified that the tax on intra-state supplies of services by way of transportation of passengers by ....
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....g clearly specifies that the word through implies that the supply should be initiated, carried on and concluded by the specified method. 6.11 In the instant case the supply is not carried on and concluded by using the applicant's app. The applicant invites attention to the below mentioned submissions:- a) The applicant provides technology to cab operators (through the APP) This allows the passenger to identify the nearby cab through which he can take the ride and no further. b) The ride is not monitored by the applicant unless it is paid for by the recipient as per the proposed pay-per use model discussed supra, which is a separate service altogether that is provided on their own account to the passenger. It is pertinent to point out that the monitoring of ride is not automatic and will have to be opted by the passenger for every ride they choose. c) It is not necessary for the applicant to be aware of the completion of the ride unless the passenger end user has opted for the pay per use model discussed supra. d) It is not necessary for the applicant to know the fare details at all. c) The fare and method of its collection is not know....
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....ing No. KAR ADRG 36/2022 dated 27.10.2022) (please refer Annexure-II) with respect to the proposed subscription based offering to the cab drivers, wherein the Karnataka AAR held that the supply by the service provider (person who has subscribed to Applicant's app) to his customers (who also have subscribed to Applicant's app) on the Applicant's computer application does not amounts to supply by the Applicant The AAR in that ruling also held that the Applicant is not liable to collect and pay GST on the supply of goods or services supplied by the service provider (person who has subscribed to Applicant's app) to his customers (who also have subscribed to Applicant's app) on the Applicant's computer application. Further the AAR observed that with reference to Merriam Webster's Dictionary, the word through' is used as a function word to indicate means, agency, intermediary such as by means of, by the agency of etc. The word 'through' is also used as a function word to indicate extent, period of time such as during entire period, from the beginning to the end. to and including etc. Thus, the word through in the phrase services supplied through electronic commerce operator, in Section 9....
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....ption fee, there would no charges on the drivers. The Subscription charges towards usage of the app is the only charges that would be collected from the driver Collection of money on behalf of from passenger The settlement of consideration is between the driver and the user, and the company has no role to play. The company does not act "on behalf of the driver" in collecting any fare from the passenger at all. Intent of the App Lead Generation for Driver and discovery of drivers for Customers. There is no Settlement to driver by the company at all. There is no collection of money from any passenger on behalf of the driver Treatment of supply through e-com The supply is not through the company or the app at all. The App is meant as a pure discovery platform to enable driver to provide services to the users and the company doesn't facilitate the mobility. Who arrives at the fare details? The fare is driver driven in terms of the proposed system. At the best Rapido may show a standard fare to empower the end user to understand what would be the standard fare for the ride involved. The company is not the provider of commuting services. The taxable su....
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....recognition Measures are being undertaken to establish face recognition wherein the driver partner would be required to upload their selfie before the ride starts. During the ride • Route deviation In case any route deviation is being noticed, a notification pops up on the customer's mobile app thereby highlighting such deviation. • Long stop In case a vehicle is stationed at a particular point for longer duration than expected, notification shall be sent to the customer to check if the ride is safe. • Sharing ride details Customers have the option to share the ride with anyone to make the ride safe. Upon sharing the ride, SMS or whatsapp message would be sent to the person with whom the ride has been shared by customer. • SOS It is proposed to have as part of the app, an SOS (Emergency call) button on the app that can be used by customers for reaching out to the team during any emergency throughout the ride. The option is visible to customers after the confirmation of a ride mid having opted for the pay per use safety option and this facility is available till the end of the r....
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....luded ride. In other words, the Applicant docs not have any information about the fare which is ultimately paid by the passenger to the Captain after the ride concludes. Accordingly, at the beginning of a ride, the Applicant is not involved in determination of the ride fare; and after the ride concludes, while the Applicant has visibility of the fare initially agreed/ decided between the Captain and passenger, it is not aware of the actual fare paid/ settled by the passenger to the Captain. 9.2 In respect of the pay-per-use ride feature, the Applicant's intent is to ensure the passenger's safety during the ride once the passenger avails the ride. However, the Applicant wishes to submit that the said feature has not been implemented till now. Accordingly, screenshots in relation to the same are not available with the Applicant. Further, basis market conditions and the Applicant's assessment, in case the Applicant implements the said feature in the future, it shall be offered to the passengers using the same infrastructure. 9.3 The Applicant herein submits that the details pertaining to the ride, i.e. start location, destination, fare initially shown and fare shown on com....
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....for subsequent rides. Accordingly, whenever the ride is marked as completed by the Captain, a communication is sent to passenger as well. 9.8 Whether App provides the Driver to notify the End of Ride As the Applicant provides a discovery' platform to the Captains to enable them to select the desired passenger to whom they wish to offer ride services, it is integral and essential for the Applicant to be aware about availability of a particular Captain, so that the leads generated nn the platform are made available to such Captain, for subsequent rides. Accordingly, the Captain's application interface includes a specific feature designed to allow Captains to notify the Applicant at the conclusion of each ride. This function is integral to ensure seamless operation of the Applicant's discovery platform service. 9.9 During the ride whether the App displays the route to the passenger While the Applicant is a mere lead generating platform, the Applicant displays the route to the passenger bearing in mind their safety and security as a discovery platform, as it is essential for us to ensure leads generated by our platform are safe for the passenger availing the ride. 9.1....
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....app ('Rapido' is with a commission free monetization model and is a service provider's (drivers/captains/subscribers) hub wherein they have absolute ownership of their supply and the applicant has no rights or say or control over the supply; the relationship between the drivers and the passengers would be of supplier and recipient and any monetary consideration between them is purely privy to their contract and the applicant is no way connected with such contract; in case of any dispute between the driver and passenger, it would be purely between them and the applicant would not be responsible; there is no involvement of the applicant in the supply of services by the drivers as well as arranging for collection of any consideration or any other form of agreed means of payment from the passengers. 14. The applicant also submitted some additional facts stating that they do not propose to collect any money from passenger or consideration towards the ride; they collect only subscription charges from the drivers for usage of the platform on raising invoice and discharge GST on the entire subscription charges; they do not act "on behalf of the driver" in collecting any fare from the pa....
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....igital products over digital or electronic network; 2 (45) - electronic commerce operator means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce; 9. Levy and collection. (5) The Government may, on the recommendations of the Council, by notification, specify categories of services the lax on intra-State supplies oj 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 to the said territory, such electronic commerce operator shall appoint a person in the taxable territo....
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....conditions viz., (a) and (b) are satisfied in the instant case, in as much as the category of services of Intra-state supplies are notified by the Government covering services by way of transportation of passengers by motor cab. Now we proceed to examine the crucial and most important issue i.e. whether the impugned services are supplied through the electronic commerce operator or not. The word "through" in Section 9 (5) is not defined in the relevant context and hence we proceed to discuss the meaning of the said word/phrase. 19. In this regard, we invite reference to Merriam Webster dictionary, in accordance to which the word Through' is used as a function word to indicate means, agency, intermediary such as by means of, by the agency of etc. The word Through' is also used as a function word to indicate extent, period of time such as during entire period, from the beginning to the end, to and including etc. Thus the word through in the phrase services supplied through electronic commerce operator, in Section 9 (5) ibid, gives the meaning that the services are to be supplied by means of / by the agency of / from beginning to the end /during entire period by e-commerce operat....
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.... consideration pertaining to the ride, on behalf of the driver. The passenger pays the consideration to the driver directly. It is pertinent to mention here that neither the definitions of electronic commerce under Section 2 (44) or electronic commerce operator under Section 2 (45) nor the charging Section 9 (5) of the CGST Act 2017 stipulates that the e-commerce operator has to collect the consideration. Though the contract is between the driver and the passenger and the service is supplied by the driver to passenger, liability to pay tax is fastened on the electronic commerce operator by way of deeming provision in Section 9 (5) i.e, "..all the provisions of this Act shall apply to such electronic commerce operator as if he is the supplier liable for paying the tax m relation to the supply of such services'. Here the supply of such service refers to the supply of services by way of transportation of passengers by a radio-taxi, motorcab, maxicab and motor cycle; as notified vide Notification 17/2017-Central Tax (Rate) dated 28.06.2017 issued under Section 9 (5) of CGST Act, 2017, and supplied through the electronic commerce operator. 22. In view of the foregoing we find that th....