TaxTMI 
TaxTMI 
2024 (11) TMI 330
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....ng an online platform to drivers for merely 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 t....
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....ffer a counter price to the rider for the requested trip; the actual 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 propos....
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....rom the subscribers who are availing the services of the Applicant's online 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 passenge....
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....of the Drivers and the Driver shall be liable or responsible for any loss or damage to the Vehicle caused by a Customer or any other third party for any reason whatsoever. 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....
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....5) of CGST Act, read with Notification No. 17/2017 Central tax dated 28 June 2017, Notification No. 23/2017-Central Tax dated 22 August 2017 and Notification No 17/2021 Central Tax dated 18 November 2021 provides for certain specified category of services, which when provided through the ECO, would be taxable 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 digi....
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....ECO or not for the proposed business model, the Applicant believes that the services of passenger transportation are not provided "through" the platform of the Applicant, but the said platform is only a means of connecting the supplier and the recipient. Detailed discussion in this regard is hereby provided in the ensuing paragraphs. 6.12 It is to be noted 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....
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....dentification of the supplier of services and doesn't take responsibility for the operational and completion of the ride. In view of these facts, the Applicant believes that it does not fall under the aspect of providing services "through" their platform as notified under Section 9 (5) of the CGST Act. Accordingly, the third condition for the applicability of levy under Section 9 (5) of CGST Act cannot be said to be fulfilled. 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 al....
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....ion 9 (1) of CGST and KGST Acts and Section 5 (1) of the IGST Act, read with Notification No. 11/2017-Central Tax (Rate) dated 28.6.2017 issued under the CGST Act and similar/identical notification issued under Section 9 (1) of the Karnataka SGST Act and Notification No. 8/2017-Integrated Tax (Rate) dated 28.6.2017, on the consideration received/ receivable of "registration fee/ periodical subscription" that the Applicant collects from the subscribers of their 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 ma....
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....s. The subscription fee/ membership fee will be charged periodically (daily/ monthly/quarterly) from the driver for provision of technology platform services which connects them with consumers desirous of availing passenger transportation services. c) Under the Proposed Model, the riders can provide the start and end location for which they intend to avail passenger transportation services. The nearby drivers are then informed about such request through the technology platform. d) 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 ....
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....ected the 1st trip shown above. The Uber app merely provides an estimated fare. However, the Applicant does not have any control and/ or rights over the final determination of actual fare and 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. Query 2: Whether the details/ data pertains to the ride i.e., start location, destination, fare initially shown, final fare shown on completion of the ride are recorded in the server/ app or not. If so, the relevant screenshots capturing the data 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 ....
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.... stage, then it may be stated as to how the above instances are proposed to be addressed. Response: It is submitted that the Uber app, in relation to the new business model, is being tested in a few cities outside Karnataka and has not been launched in Karnataka. Therefore, we have provided screenshots of the Uber app from these cities where the new business model has been launched. The applicant requested to take the above submissions on record and oblige and also requested to grant an opportunity to be heard in person. 8.1 The applicant, filed Writ Petition No.25497/2024, before the Hon'ble 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....
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....t is forwarded to the relevant drivers; the drivers may either accept the ride or reject or offer a counter price to the rider for the requested trip; the actual supply of passenger transportation services by road is performed by the driver for the rider; the proposed business model would be 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 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 ha....
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....ant For qualifies to be an E-Commerce Operator is proper or not. We invite reference to Section 2 (44) and 2 (45) of the CGST Act 2017, which are as under: 2 (44) -electronic commerce means the supply of goods or services or both, including digital 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; It could be inferred from the definitions supra 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 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....
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.... case, the vehicles intended to be used, for provision of services of transportation of passengers are auto rickshaws (three-wheeler vehicles) and cars (four wheelers) which are motor vehicles adapted to carry maximum four passengers excluding driver and thereby they can carry not more than six passengers excluding the driver and hence they qualify individually to be a "motorcab". Further the two-wheeler is covered under "motor cycle". Thus the second condition is also 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 / motor cycle. 18.3 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. 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 ....
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....r, pickup location chosen by rider etc., are available on Uber App. (vii) Ride is tracked by the Uber App. The App displays the route to the passenger enroute the trip. This information is also shared by the App to the driver. (viii) Beginning and end of the ride are notified to the passenger through the App (ix) The App also notifies the arrival of Driver at the pickup location. (x) The driver collects the payment from passenger directly. It is apparent, from the aforesaid facts, that the App (digital platform) does not merely connect the rider with the driver but provides a platform for communication between the driver and rider without which the contract for providing the passenger transportation service cannot be completed. The App provides for onboarding 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 pas....
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....e of Section 9 (5) the applicant is liable to pay tax on the supply of the services of transportation of passengers by a radio-taxi, motorcab, maxicab and motor cycle. 23. Applicant sought to bring attention to various rulings of this authority on the subject issues. In terms of Section 103 of CGST Act, 2017, a ruling is binding only on the applicant and to the facts and circumstances brought out by the applicant before the authority. It is beyond the scope of this Authority to compare and distinguish the facts and circumstances of different cases, especially when facts in the instant case are brought out elaborately and discussed in detail. 24. In view of the foregoing, we pass the following RULING a. 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. 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....
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....t Gomt gan Station Ba Ashok is here Ride details Meet at the pickup point Share PIN 5 6 2 3 UP32PN5613 Green Balai RE 4S Document 5 Lohia Path Please pay your driver Rs.55 You can view more details in the app. Lohia Path Lohia Path R but Chand विà¤à¥‚तिप Destination Felek pie Caile Dropoff at 1:10 pm Heading to Madhurima Hotel Please pay your driver *55. CLOSE VIEW DETAILS Document 6 1:09 .. Madhurima Hotel Gomtinagar, Vibhuti Khand, II, Lucknow, Uttar Pradesh Siddharth को छोड़ रहा है Siddhartha पेमेंट कलेकà¥à¤Ÿ करें Document 7 Destination Gun cya Dropoff at 1:09 pm Sticka tatails Heading to Madhurima Hotel Trip back home to vote? Try Intercity →→ Document 8 Please pay your driver 55 You can view more detalis in the app. Lohia Peth Loria Path Bypass विà¤à¥‚ति खाद म Destination 1.10 -> X पेमà¥....