TaxTMI 
TaxTMI 
2024 (11) TMI 330
X X X X Extracts X X X X
X X X X Extracts X X X X
....erely connection with the riders. 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 nature of supply as conceptualized in Section 9 (5) of CGST Act, 2017 read with notification No. 17/2017 dated 28.06.2017? b. Whether the Applicant is liable to collect and pay GST on the supply of services supplied by the drivers/service provider (person who has subscribed to online Uber platform in relation to proposed business model) to their customers (person who has subscribed to online Uber platform) identified on the Uber's platform) under the proposed business model? 4. Admissibility of the Application : The advance rulings are sought by the applicant on the questions, at para 3 supra, in respect of the issues of (i) applicability of a notification issued under the provisions of the CGST/KGST Act 2017, (ii) determination of the liability to pay tax on any goods or services or both and (iii) whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both, w....
X X X X Extracts X X X X
X X X X Extracts X X X X
....al supply of passenger transportation services by road is performed by the driver for the rider; the proposed business model would a service provider's hub wherein the supplier has absolute ownership of their supply; the terms and conditions governing such supply and other aspects such as quality, price etc., are mutually agreed upon by the drivers and riders; the applicant has no rights over the supply of passenger transportation services by drivers to their customers/riders; the proposed model would be commission-free monitisation model i.e. no commission would be charged by the applicant either from the drivers or from the riders on a per ride basis, however the applicant may charge a periodical subscription membership fee from the subscribers/drivers; the applicant does not issue an invoice to the rider for the trip; any disputes between the persons registered for the new business model and the recipients of transportation services, are to be settled between them and the applicant is in no way involved in the dispute resolution process. 5.5 The applicant submitted further that the online platform in the proposed business model is only involved for the limited purpose of identi....
X X X X Extracts X X X X
X X X X Extracts X X X X
....e technology platform to provide services on their own under Section 9 (1) of the CGST/ KGST Act 2017 and Section 5 (1) of the IGST Act 2017 read with Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. 6.2 The Applicant, in no way, is liable for tax on the transactions that takes place between these individuals/ subscribers/ registered persons (service provider) and their customers. Also, the terms 'Supplier' has been defined under the provisions of GST act to be "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 In view of the above definition as laid down under the CGST Act, "supplier" means the person actually supplying the services. In the present case, the Applicant proposes to supply technology services by way of offering its platform to its subscribers/ drivers to connect with the riders. Since the technology services are provided by the Applicant, the Applicant would be treated as "supplier" for the purpose of technology services. However, the passenger transportation services by road would be supplied by the subscribers registe....
X X X X Extracts X X X X
X X X X Extracts X X X X
....oever. 11. The Driver shall not drive rashly, shall follow traffic regulations and all Applicable Laws during the performance of the Driver Services, not consume liquor/ cigarette / bidi, or any other kind of intoxicant while performing the Driver Service/(s) and shall always have and hold a valid driving license and registration/insurance papers for the Vehicle. Driver shall take all calls from the Customer and Uber only after stopping the Vehicle at an appropriate location to take the call, without being a hindrance to the traffic around him or without violating any traffic rules. 12. The Driver shall be solely responsible and liable for: * any failure to complete a Service Request accepted by the Driver; * any failure to pick up Customer(s) at the allotted time and/or place; * any act or omission on the part of its Drivers including any rash and negligent driving, verbal, physical or harassment of any nature; * any violation or non-adherence to the Applicable Law by the Driver; * any physical and/or mortal danger caused to the Customers whilst using or in connection with the Driver Service; * charging excess amounts from the Customer over and above the total Fare....
X X X X Extracts X X X X
X X X X Extracts X X X X
....xable in the hands of ECO. 6.6 The conditions required to be satisfied in order to attract levy under Section 9 (5) of CGST Act are as below:- a) There exists an Electronic Commerce operator. b) The services by the supplier are covered in the notified services. c) The services by the supplier to the consumer are supplied through the electronic commerce operator. The above conditions once satisfied will result in the levy of GST in the hands of ECO and all the provisions shall apply to such ECO as if he is the supplier liable for paying GST in relation to supply of such services. 6.7 In view of first condition, the Applicant would like to mention that the term 'electronic commerce' has been defined under Section 2 (44) as below:- (44). "Electronic commerce" means the supply of goods or services or both, including digital products over digital or electronic network. Further, the term 'electronic commerce operator' has been defined under Section 2 (45) as below:- (45). "Electronic commerce operator" means any person who owns, operates, or manages digital or electronic facility or platform for electronic commerce;" As per the above definitions, ECO shall mean the person ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....that the term "through" is not defined under the GST provisions. As per the dictionary meaning, the word 'through' has been defined to indicate 'means/ agent/intermediary' and also as a function to denote 'from beginning to the end'. As per the law lexicon dictionary also, it has been explained that the word 'through' always means from end to end or from side to side, but frequently means simply within. Further, taking reference from Merriam Webster dictionary', the word 'through' in Section 9 (5) of CGST Act, gives the meaning that 'services are to be supplied by means of/ by the agency of / from beginning to the end / during the entire period by e-commerce operator.' 6.13 Moreover, the Applicant is only involved in connecting the supplier of services and consumer of the services with no further involvement (like a Just dial, yellow pages or business linking services). The passenger transportation services in the present case, happens independent of the Applicant and the Applicant is involved only in the identification of the supplier of services and does not take responsibility for the operational and completion of the ride. Accordingly, the Applicant does not fulfil the condit....
X X X X Extracts X X X X
X X X X Extracts X X X X
....illed. 6.15 Moreover, Section 9 (5) of CGST Act, does not contemplate or envisage a non-interfering and commission free business adopted by the Applicant in the Proposed Business model. It is applicable to a business model which collects payment on behalf of the supplier. As the Applicant has not collected any payment on behalf of the supplier, the question of collecting tax on behalf of the supplier does not arise. Hence, the Applicant would not be liable for the GST on the transactions carried on by the supplier with their customers. Moreover, the Driver directly raises their invoice to their customer and the customer pays directly to the Driver which rules out any possibility on the part of the Applicant to pay the taxes of the supplier. Reference can also be drawn from other Advance Rulings issued on similar facts 6.16 We would like to draw reference from the ruling held by Your Hon'ble Bench in case of other assessees involving similar business transactions. a) In the case of M/s Multi-Verse Technologies Private Limited (Advance Ruling No. KAR ADRG 36/2022) Your Hon'ble Bench has been kind enough to decide positively on similar grounds as proposed currently by the Applican....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... proposed business model and nothing more. 6.18 It is also the understanding and bona fide belief of the Applicant that, the Applicant is not liable to pay tax under Section 9 (5) of the CGST and SGST Acts and Section 5(5) of the IGST Act, read with Notifications Nos. 17/2017-Central Tax (Rate) dated 28.6.2017 issued under the CGST Act and similar/identical notification issued under Section 9 (5) of the Karnataka SGST Act and 14/2017-Integrated Tax (Rate) dated 28.6.2017, respectively. 6.19 As per the provisions of Section 9 (1) of the CGST and SGST Acts and Section 5 (1) of the IGST Act, which are principal charging provisions of the Act, the liability to pay tax on "outward" taxable supplies of services, as the case may be, is on the "supplier". In the present matter of the Applicant, it is not in dispute that insofar as taxable supplies affected by the subscribers of the proposed business model of the Applicant to their customers by using the Applicant's platform, the "suppliers" for the purposes of the CGST, SGST & IGST Acts are the subscribers and not the Applicant. Therefore, the liability to pay tax on the value of all such supplies is on the respective suppliers and certa....
X X X X Extracts X X X X
X X X X Extracts X X X X
....A driver may accept the request, post which the rider is informed of the details of the driver. The platform provides a suggested/ estimated fare basis the distance between start and end location as provided by the rider, however, actual fare shall be directly determined and settled independently between rider and driver. e) The Applicant has no involvement in the final determination and collection of trip fare. The payment for trip fare is directly made by the rider to the driver. f) The actual supply of passenger transportation services by road is performed by the driver to rider, and the Applicant has no rights over the supply of passenger transportation services to riders. g) The Applicant does not raise any invoice for the passenger transportation services provided by the driver to rider. h) The Applicant is not involved in dispute resolution between the driver and rider. 8. The applicant, vide this office letter dated 30.04.2024, was asked to submit additional information relevant to the issue with regard to the queries raised therein and the reply to the said letter was submitted by the applicant, vide their letter dated 31.05.2024, inter alia stating as under: Qu....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ta may be furnished. Response: As mentioned in the advance ruling application, certain details pertaining to the ride are available on the Uber app such as driver information, vehicle information, suggested fare, trip destination requested by the rider, and the pick-up location chosen by the rider. This information is necessary to help riders and drivers to connect. It may be noted that the Applicant does not have any control and/ or rights either over the supply of passenger transportation services by drivers and on final determination of actual fare. The Applicant is not aware of the actual fare paid by the rider to the driver. The Uber app has no record of the amount paid by the rider to the driver. Sample screenshots of the Uber app rider screen, as visible to the rider are provided below: Query 3: Whether the ride is tracked by the app? Response: As stated in the advance ruling application and in the response to Query 2, certain information that is necessary to provide Uber's services such as start location, destination, estimated fare initially calculated, etc., is available in the Uber app. Query 4: Whether the App notifies the passenger on the arrival of the driver at ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....High Court of Karnataka, for expeditious issuance of the advance ruling and the Hon'ble High Court issued interim directions dated 25.09.2024 to dispose of the advance ruling application of the applicant, within a period of six weeks. Accordingly, an opportunity of personal hearing was granted on 21.10.2024 and Sri. Onkar Sharma, Advocate and authorized representative of the applicant appeared and reiterated the facts narrated in the application. FINDINGS & DISCUSSION 9. At the outset we would like to make it clear that the provisions of CGST Act, 2017 and the KGST Act, 2017 are in pari-materia and have the same provisions in like matters and differ from each other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the KGST Act. 10. We have considered the submissions made by the applicant in their application for advance ruling. We also considered the issues involved on which advance ruling is sought by the applicant and relevant facts along with the arguments made by the applicant & the submissions made by their learned....
X X X X Extracts X X X X
X X X X Extracts X X X X
....heir customers/riders; the proposed model would be commission-free monitisation model i.e. no commission would be charged by the applicant either from the drivers or from the riders on a per ride basis, however the applicant may charge a periodical subscription membership fee from the subscribers/drivers; the applicant does not issue an invoice to the rider for the trip; any disputes between drivers and the riders are to be settled between them and the applicant is in no way involved in the dispute resolution process. 14. The applicant further claimed that the supply happens independent of the applicant and the applicant has no say/role in determining the quality, price etc., for the service rendered by drivers; the applicant is not involved directly or indirectly in the supply of services by the drivers; the applicant is not in any way concerned with the collection of the consideration from the clients/riders, the riders pay the drivers directly for the transportation service through cash or digital payments via UPI or digital wallets and the applicant doesn't facilitate any collection payment services for the drivers/riders; the digital platform of the applicant provides an esti....
X X X X Extracts X X X X
X X X X Extracts X X X X
....or 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 the applicant owns digital platform for the supply of services. Thus, the applicant squarely fits into the definition and qualifies to be an Electronic Commerce Operator. 17. The applicant contends that they are a technology providers; the drivers provide mobility/ride services to the passengers/riders; they neither know about the final fare nor they collect any amount towards consideration of the ride and thus the ride is not through them and thus they are not liable to discharge tax in terms of Section 9 (5) of the CGST Act 2017. We therefore proceed to examine the relevant portion of charging section i.e. Section 9 (5) of the CGST Act 2017, as under: 9. Levy and collection. (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 ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d 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. 18.4 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, intermediacy 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 operator. 19. In view of the above, to examine whether services are provided through the applicant, further information on the intended operations of the applicant was sought through a questionnaire dated 30.04.2024, to which the applicant replied vid....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ing the drivers, provides for user interface for drivers and riders, enables selection of start and end point by the rider, calculates and displays a fare Once ride is confirmed, the location of customer & pick up point is shared by the App; start of ride, route taken for ride, end of ride are captured and notified to customer by the App. Thus effectively the services of transportation of passenger by the driver is supplied through the Applicant's App/digital platform/portal from beginning to end and also during the entire period of the ride. Thus the third condition that the services are supplied through electronic commerce operator is also satisfied. 20 Applicant contends that the fare displayed is only estimated fare and the actual amount paid is not captured in the App. The facts as brought out in para 19 above indicate otherwise. The fare displayed in the App is fixed based on Start and End point distance and route. As seen from the screenshot, at the end of ride the app displays how much the rider is required to pay to the driver. Thus, the fare is also fixed by the App, and the same forms the basis for effecting the transaction between the rider and driver using the App. 2....