TMI Blog2021 (9) TMI 1065X X X X Extracts X X X X X X X X Extracts X X X X ..... AND ARUN RICHARD MEMBER Present for the applicant : Shri Devam Sheth, CA BRIEF FACTS: The applicant M/s. Gensol Ventures Pvt. Ltd intends to own, develop an electronic/digital platform for booking of cabs. The applicant vide submission dated 13-8-2021 submitted that the drivers will list their electric motor vehicles on the proposed electronic platform/App for booking by the customers for the passenger transportation services; that E-Commerce Operator means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce and considering this, the applicant can be termed as a E-Commerce Operator; that the Electric Motor Vehicle operated by the Drivers will be in connection with Central Office and can be tracked through Global Positioning System (GPS) or General Packet Radio Service (GPRS) and qualify as radio taxi. 2. The applicant further submits that as a business measure, it offers discounts to the customers for the passenger transportation service(cab service) provided by the drivers and the consideration charged and collected by Gensol from the customer is after deducting such discount amount; that an amount equival ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upplied in terms of passenger transportation service under Goods Service Tax Law? 5. The applicant has submitted as follows: For Question-1 (i) According to Section 2 of the CGST Act, 2017 the definitions of electronic commerce and electronic commerce operator are as under: (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; (ii) Pursuant to aforesaid definition, it can be said that the applicant squarely falls under the category of Electronic Commerce Operator and activity conducted in form of electronic commerce which is performed over electronic network. (iii) Clause(iv) of Section 24 of the CGST Act, 2017 reads as under: 24. Notwithstanding anything contained in sub-section (1) of section 22, the following categories of persons shall be required to be registered under this Act, (iv) person who are required to pay tax under sub-section (5) of section 9; In the instant case, the applicant being the person require ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ection 9(5) of the CGST Act, 2017 be applicable. In this regard, Notification No.17/2017-Central Tax (Rate) dated 28-6-2017 reads as under: 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 recommendations of the Council, hereby notifies that in case of the following categories of services, the tax on intra-State supplies shall be paid by the electronic commerce operator (i) services by way of transportation of passengers by a radio-taxi, motorcab, maxicab and motor cycle; (ii) services by way of providing accommodation in hotels, inns, guest houses, clubs, campsites or other commercial places meant for residential or lodging purposes, except where the person supplying such service through electronic commerce operator is liable for registration under sub-section (1) of section 22 of the said Central Goods and Services Tax Act. Explanation .- For the purposes of this notification,- (a) radio taxi means a taxi including a radio cab, by whatever name called, which is in two way radio communication with a central control off ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he CGST Act, relating to discount, provides that discounts given before or at the time of supply recorded in the invoice, can be reduced from the value of supply. Section 15(3) reads as under: 15. (1) The value of a supply of goods or services or both shall be the transaction value, which is the price actually paid or payable for the said supply of goods or services or both where the supplier and the recipient of the supply are not related and the price is the sole consideration for the supply. (2)....... (3) The value of the supply shall not include any discount which is given (a) before or at the time of the supply if such discount has been duly recorded in the invoice issued in respect of such supply; and (b) after the supply has been effected, if- (i) such discount is established in terms of an agreement entered into at or before the time of such supply and specifically linked to relevant invoices; and (ii) input tax credit as is attributable to the discount on the basis of document issued by the supplier has been reversed by the recipient of the supply. (ix) Upon referring to subsection (1) of above section, it categorically states t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... icant remits the entire value of supply (without reducing the discount amount) to Driver/s. In other words, the remittance made by the applicant to Driver constitutes of two components: (a) amount collected from the customer (b) amount equivalent to the discount offered to the customer, which is a marketing expense for the applicant, and contributed by it in the present case. In the instant case, marketing expenses (of the applicant) paid by the applicant to Driver cannot be said to be consideration for or towards any service by Driver, since no reciprocal activity is performed by Driver in order to receive such compensation. The Bombay High Court, in Bai Mamubai Trust Others vs. Suchitra [2019 (31) GSTL 193 (Bom)] has held that enforceable reciprocal obligations are essential aspect of a supply. Similarly, the CESTAT in Ruchi Soya Industries ltd. vs. Commissioner of Customs, Central GST and Excise, Indore [TS-301-CESTAT-2021-ST ] in context of service tax law, held that it is essential to establish the basic elements for levy of tax i.e. service provider, services receiver, payment of consideration from service recipient to service provider, services etc. In the abs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 2.5 Provided that credit of input tax charged on goods and services used in supplying the service, other than the input tax credit of input service in the same line of business (i.e. service procured from another service provider of transporting passengers in a motor vehicle or renting of a motor vehicle), has not been taken [Please refer to Explanation no. (iv)] 6 - (iv) Wherever a rate has been prescribed in this notification subject to the condition that credit of input tax charged on goods or services used in supplying the service has not been taken, it shall mean that,- (a) credit of input tax charged on goods or services used exclusively in supplying such service has not been taken; and (b) credit of input tax charged on goods or services used partly for supplying such service and partly for effecting other supplies eligible for input tax credits, is reversed as if supply of such service is an exempt supply and attracts provisions of sub-section (2) of section 17 of the Central Goods and Services Tax Act, 2017 and the rules made thereunder. (xiii) Ent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... liability of 18% GST on the said commission charged on Driver. And that the subject application is concerning the GST liability on the component pertaining to passenger transportation service. FINDINGS: 7. At the outset we would like to make it clear that the provisions of CGST Act and GGST Act are in parimateria and have the same provisions in like matter 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 GGST Act. 8. We have carefully considered all the submissions made by the applicant. We find that the applicant has expounded the position of law and has arrived at its conclusions as reflected at Paragraph 5(xiv). We agree with the submission of the applicant and find that the applicant has enunciated and expounded the position of law crystal clear with respect to subject. 9. We concur with the applicant s views and thereby pass the Ruling as follows: RULING 1. M/s. Gensol is an e-commerce operator and shall be liable to be registered. 2. M/s. Gensol is liable t ..... 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