TaxTMI 
TaxTMI 
TaxTMI 
2025 (8) TMI 1288
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....gistered mobile number provided by merchant; * that during the phone call verification, applicant's team confirms business details of the respective merchant/s; that once a business is verified, a merchant can add his/her offer from the freedeem app by sending a mail to applicant's back-end team at Ahmedabad; * that generally on merchant's request, offers are created by applicant's back-end team and once the same is verified by the merchant, the same goes live on the freedeem app; that all operations are taken care of from the central office based at Ahmedabad location; * that the primary function is to enable the local businesses (merchants) to participate on the freedeem app without any upfront charges, by offering discounts / deals on their merchandise; * that freedeem app charges a success fee (commission) only if business is transacted through the app; * that the applicant is paying GST on the success fees @18%; * that consumers have to visit the store of the merchant physically and avail the offer as per the terms and conditions mentioned in the offers; * that the applicant never provides any delivery of goods or services to the recipient of goods or services th....
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....rther claims that merchants engaged in bakery products, saloons, beauty parlors, hotel and restaurants are registering themselves on the freedeem app and floating their scheme in the open market to attract business. 6. The applicant, thereafter relying on notification No. 17/2017-CT(R) dated 18.11.2017, as amended, has stated that in case of restaurant services, when supplied through ecommerce operator, GST is to be paid by ecommerce operator in terms of section 9(5), ibid; that the applicant further stated that they will not fall within the ambit of 9(5), owing to the following viz., * that a platform is provided to the merchants through the app; that this allows the end users to identify offers through which they can avail maximum benefit; * that the merchant ought to have given discount/offers to the end users after making live on app; * that the applicant is having full control over offer once it goes live; * that the applicant only receives the money on behalf of the merchants from the end users; * that the applicant is not responsible for deficiency in services; * that the applicant is only engaged in connecting merchants to the end users. 7. In view of the fore....
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....ETAILS: All created DEALS and OFFERS must be communicated to Freedeem from time to time through the merchant's official emall id only which Is mentioned in this registration form. FREEDEEM SERVICES: * The Merchant's Offers ("Offers") shall be featured on the Freedeem Platform (as well as their strategic partner application including all other platforms, if any) in accordance with the offer options as agreed to with the Merchant on its goods/services from time to time during the Term of the Agreement. * All Offers including but not limited to Exclusive offers and other offers if any, as well as Freedom Fees for the same can be agreed through emails from the registered email ID or by way of a separate Annexure to this form. * The Users shall aval the Offers by paying offers'/deals' value as prescribed in the selected voucher using "Buy Now and/or Pay Bil" payment option as per availability at the Freedeem platform and same will be required to show at the Merchant's Business Establishment for verification. * Freedeem will receive the deal/offer amount from customer via "Buy Now and/or Pay Bill" payment option on behalf of the merchant (as per prescribed rate in coupon or r....
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....ill process the reimbursement of the merchant share on the basis of number of redemption done at the merchant's outlet/s as shown in the App dashboard. 9. In case of multiple franchisee outlets, it is required to mention all necessary details of each branch/outlet in the separate annexure along with the agreement to process for each outlets' registration on freederm app. *Note: Buy Now/Pay Bill payment method will be effective in your city/location from the date of email/what's app notification you will receive from the Freedeem Applicable Taxes: Taxes will be deducted from the collected offer value and submitted with Tax department as per the following Food & Beverages Categories: A) GST & Non GST registered Restaurant Services Merchants: * 18% GST on Freedeem commission. * 1% TDS on offer value of products / services redeemed if PAN card submitted / 5% TDS of PAN card not submitted in case of HUF/Individual TDS will not be applicable till 5 lacs turnover during the FY.) * 1% TCS on net value of products / services redeemed (only for GST registered Restaurant Services Merchants). * GST to be paid by the Merchant at their own in the GST return. * In case of GS....
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....sought ruling, it would be prudent to reproduce the relevant sections, notifications, etc. for ease of understanding viz., CENTRAL GOODS AND SERVICES TAX ACT, 2017 * Section 2. Definitions.- In this Act, unless the context otherwise requires,- (44) "electronic commerce" means the supply of goods or services or both, including digital products over digital or electronic network; (45) "electronic commerce operator" means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce; * Section 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 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 ....
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....f the net value of taxable supplies made through it by other suppliers where the consideration with respect to such supplies is to be collected by the operator. Explanation.- For the purposes of this sub-section, the expression "net value of taxable supplies" shall mean the aggregate value of taxable supplies of goods or services or both, other than services notified under sub-section (5) of section 9, made during any month by all registered persons through the operator reduced by the aggregate value of taxable supplies returned to the suppliers during the said month. (2) The power to collect the amount specified in sub-section (1) shall be without prejudice to any other mode of recovery from the operator. (3) The amount collected under sub-section (1) shall be paid to the Government by the operator within ten days after the end of the month in which such collection is made, in such manner as may be prescribed. Notification No. 17/2017-Central Tax (Rate) New Delhi, the 280 June, 2017 G.S.R ...... (E) .- In exercise of the powers conferred by sub-section (5) of section 9 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on the recommendat....
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....g clause shall be inserted, namely:- "(Iv) supply of restaurant service other than the services supplied by restaurant, eating joints etc. located at specified premises." 12. The facts of the case are mentioned in detail supra, and hence is not being repeated for the sake of brevity. 13. Moving on to the first question, in terms of the definition at section 2(44) & (45) of the CGST Act, 2017, supra, 'electronic commerce' means supply of goods or services or both including digital products over digital or electronic network while 'electronic commerce operator' means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce. 14. We find that bakery, saloons, beauty parlours, hotels and restaurants, etc., are merchants who have registered on the app; that the backend team of the app, stationed at Ahmedabad verifies the business & consequently the merchant can add his/her offer in the app by sending a mail to the backend team; that the app enables purchase of voucher/coupon through the freedeem app in two ways viz., 'pay bill' or 'buy now'. The applicant, during the course of personal hearing held on 29.7.2025, has relied on circul....
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....sideration and the transactions in voucher themselves cannot be considered either as a supply of goods or as a supply of services. However, supply of underlying goods and/or services, for which vouchers are used as consideration or part consideration, may be taxable under GST. Though, it stands clarified that transaction in vouchers, is neither supply of goods nor services, the applicant is on record that in both the methods viz., 'pay bill' or 'buy now', the payment is routed through their Freedeem app. What emanates from the above is that there is collection of consideration by the applicant on behalf of the merchants, thereby making the activity supply of services over electronic network, & hence bringing the said activity within the ambit of 'electronic commerce'. Further, it is factually not disputed that it is the applicant who owns, operates, manages the freedeem app for electronic commerce. We, therefore, answer the first portion of the first question seeking a ruling by holding that the applicant in view of the activity mentioned above, is an electronic commerce operator under the GST Act. 15. As far as the second portion of the first question, i.e. if the applicant is a....
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....ed in terms of section 9(5), ibid, they are outside the scope of the said sub-section. 17. Moving on to the third question, viz., if answer of question (i) & (ii) above, is in yes, then as to whether applicant is required to deduct TCS while making payment to registered merchants and un-registered merchants or otherwise. The question has sub-questions. Since the applicant has sought answer to this question only if answer to question [i] and [ii] are in yes. That not being the case as is evident above, and since we have answered the second question in negative, we are not inclined to answer this question. However, the moot point about TCS has been discussed in the paragraph below. 18. The fourth question is that if the freedeem app gets exemption from RCM for Restaurant service, will the TCS be applicable to the Restaurant Service in that case? 18.1 Surprisingly, after vehemently denying that they are not providing food delivery services to the end users, and do not fall under 'restaurant services' the appellant is seeking a ruling on the question as to whether they are required to deduct TCS if they are not liable under RCM for restaurant services. We find that section 52(1), ib....
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....ne administrative jurisdiction where all e-commerce operators having business (but not having physical presence) in that State/UT shall register. The proper officer for the purpose of registration of ECOs has also been notified by each State/UT. For the second portion of the question, regarding the rate of TCS to be deducted, we would like to refer to Sr. No. 4 of the aforementioned FAQ, viz., Sr.no. Question Answer 4 What is the rate of TCS notified by Government? Rate of TCS is 0.5% under each Act (i.e. the CGST Act, 2017 and the respective SGST Act / UTGST Act respectively) and the same is 1% under the IGST Act, 2017. Notifications No. 52/2018-Central Tax and 02/2018-Integrated Tax both dated 20th September, 2018 have been Page 2 of 11 issued in this regard. Similar notifications have been issued by the respective State Governments also. Accordingly, the applicant is required to take registration for TCS in respect of each state and the deductions have to be reflected in the concerned registration while filing the returns. 20. Moving on to the last question, posed for ruling, viz., in case freedeem app follows provision of section 9(5), is it mandatory to register as a ....