Authority for Advanced Ruling (Karnataka): In an application sought for advance ruling, the two-member bench of M.P. Ravi Prasad and T. Kiran Reddy has held that the applicant, though qualifies the definition of being an e-commerce operator, but it is not the person liable for discharge of tax liability under Section 9(5) of the Central Goods and Services Tax Act, 2017 (‘CGST’).

The applicant has sought advance ruling on:

  • Whether the applicant satisfies the definition of an e-commerce operator and the nature of supply as conceptualised in Section 9(5) CGST Act, 2017 read with notification No. 17/2017 dated 28-06-2017.

  • Whether the supply by the service provider to his customers on the applicant’s computer application amounts to supply by the applicant.

  • Whether applicant is liable to collect and pay GST on the supply of goods and service supplied by the service provider to his customers on the applicant’s app.

The applicant provides services through an application for facilitating business transactions of goods or services connecting through the said platform to the sellers and buyers.

The Authority referred to Section 2(44), 2(45) and 9(5) of the CGST Act and said that an Electronic Commerce Operator (ECO) means any person who owns, operates, or manages digital or electronic facility or platform for electronic commerce. In the present case, the applicant owns a digital platform for the supply of goods and services, thus, it was held that the applicant qualifies to be an ECO.

The Authority examined Section 9(5) CGST Act, wherein it is stipulated that the provisions of CGST ACT, 2017 shall apply to ECO, as if he is the supplier liable for paying tax in relation to the supply of certain services, provided (a) the categories of the services shall be specified by notification, on the recommendation of the Council, by the Government, (b)the supply shall be intra-state supplies and (c)must be through an electronic commerce operator.

It also examined the Notification 17/2017 – Central Tax (Rate), wherein it was notified that tax on intra-state supplies for services by way of transportation of passengers by a radio-taxi, motorcab, maxicab and motorcycle shall be paid by the ECO, and said that the conditions (a) and (b) are satisfied in the present case.

Further, the Authority interpreted the word “through” in condition (c) of Section 9(5) CGST Act and said that it means the services are to be supplied by means of /by the agency of/from the beginning to the end/during entire period by ECO.

The Authority observed that the applicant because of their unique business model, merely connects the driver and the passenger and their role ends on such connection, do not collect the consideration, have no control over actual provision of service by the provider, do not have the details of the ride, thus, the supply happens independent of the applicant and the applicant is involved only in the identification of the supplier of services and doesn’t take responsibility for the operation and completion of ride. Therefore, the supply of services is not through the ECO, but is independent, thus, the applicant does not satisfy the conditions of Section 9(5) for the discharge of tax liability by ECO.

Further, it was held that the supply by the service provider to his customers on applicant’s application does not amount to supply by the applicant. Thus, the applicant is not liable to collect and pay GST.

[Multiverse Technologies Private Limited, In re., 2022 SCC OnLine Kar AAR-GST 24, decided on 27-10-2022]

Advocate who appeared in this case :

Represented by: Chartered Accountant Chetan Kumar.

*Apoorva Goel, Editorial Assistant has reported this brief.

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