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TMI Blog2024 (7) TMI 1505X X X X Extracts X X X X X X X X Extracts X X X X ..... lers and three-wheeler passenger transport services offered by third party drivers by means of the company website and its mobile app platform "Rapido". The applicant proposes to introduce computer/mobile application services to independent four-wheeler cab service providers on subscription basis, as a discovery platform to enable them to connect with potential end-users (also referred to as passengers, who require the services of such third party drivers on its platform. The third party drivers/subscribers) shall enter into a standard agreement to create a business user account, on furnishing certain documents, which shall be limited to providing of license or permission to use the said app. The applicant also proposes to introduce pay per use ride monitoring fee, which is an optional service provided to the passengers, to ensure the passenger's safety during the ride that the passenger avails from the four-wheeler cab service providers. 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egister with the app, enter into a standard agreement and have a business user account that provides license or permission to use the said app. 5.2 The Applicant submitted that in their proposed model, the independent four wheeler cab service provider shall become a subscriber to the app and the relationship between the members and the passenger would be of supplier and recipient and any monetary consideration involved between them is purely privy to their contract and the applicant in no way connected with such contract; If there is any dispute between the members registered on the App and the passengers, it is purely between them, and the applicant would not be responsible; the App, with a commission free monetization model, is a service provider's hub wherein they have absolute ownership of their supply, and the applicant has no rights or say or control over the supply and there is no involvement of the applicant in the supply of services from the members registered on the App as well as arranging for collection of any consideration or any other form of agreed means of payment from the passengers to the registered members. The applicant also propose to introduce pay per use ri ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... drivers and drivers to offer their services to passengers without getting into acting as an intermediary for, or and on behalf of either of the sides to the transaction. There is no Settlement to driver by the company at all. There is no collection of money from any passenger on behalf of the driver. Therefore, there is no concept of settlement to the driver at all. The driver pays the subscription charges on which the GST is paid. The consideration payable by the user to the driver is paid directly and not through the company at all. The company does not collect any money from a passenger which is owed to the driver at all. It therefor is pertinent to say that the company is not in the space of collecting any money on behalf of the driver. Treatment of supply through e-com The App is meant as a pure discovery platform to enable driver to provide services to the users and the company doesn't provide the mobility services. It is the driver who provides the supply by himself and not through Ute app. It is therefore submitted that the company does not provide the e-com related services and does not act as an intermediary in providing the service as well. It is purely a discovery p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in terms of said sections the liability to pay tax on "outward" taxable supplies of goods or services or both, as the case may be, is on the "supplier". Section 2 (105) defines the expression "supplier", in relation to any goods or services or both which shall mean 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 The taxable supplies effected by the subscribers of the app platform of the applicant to their passengers by using the applicant's app platform, the suppliers for the purpose of CGST/KGST/IGST Acts are the subscribers of the app platform and not the applicant and therefore, the liability to pay tax on the value of all such supplies is on the respective suppliers and certainly not on the applicant. Further the provisions of Section 9 (1) of the CGST /KGST Act and Section 5 (1) of the IGST Act are not subject to Section 9 (5) and Section 5 (5) of the said acts respectively. 6.4 The definitions of the expression "electronic commerce' under Section 2 (44) and the expression "electronic commerce operator" under Section 2 (45) of the CGST Act ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dated 18.11.2021 does not contemplate or envisaged noninterfering and commission free business adopted by the applicant. It is applicable to business model which collects payment on behalf of the supplier. As the applicant does not propose to collect any payment on behalf of the supplier the question of collecting tax on behalf of the supplier cannot arise. Hence, the applicant would not be liable for the GST on the transaction earned on by the cab provider with his passenger. Moreover, the supplier raises invoice to his passenger & the passenger pays directly to the cab service provider which rules out any attempt on the part of the applicant to pay taxes of the supplier. 6.8 On a joint reading of the definitions of 'electronic commerce' and 'electronic commerce operator' in terms of Sections 2 (44) and 2 (45) respectively. Section 9 (5) of the CGST Act 2017 and Notification No 17/2017-Central Tax (Rate) dated 28.06.2017 wherein it is notified that the tax on intra-state supplies of services by way of transportation of passengers by a radio-taxi, motor cab, maxi cab and motor cycle shall be paid by the electronic commerce operator, the applicant submits that it is a technology p ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng the applicant's app. The applicant invites attention to the below mentioned submissions:- a) The applicant provides technology to cab operators (through the APP) This allows the passenger to identify the nearby cab through which he can take the ride and no further. b) The ride is not monitored by the applicant unless it is paid for by the recipient as per the proposed pay-per use model discussed supra, which is a separate service altogether that is provided on their own account to the passenger. It is pertinent to point out that the monitoring of ride is not automatic and will have to be opted by the passenger for every ride they choose. c) It is not necessary for the applicant to be aware of the completion of the ride unless the passenger end user has opted for the pay per use model discussed supra. d) It is not necessary for the applicant to know the fare details at all. c) The fare and method of its collection is not known to the applicant. f) The fare is not collected through the applicant. g) The applicant is not responsible to the supplier for non-receipt of the consideration for the supply. h) The applicant is not responsible to the consumer for deficiency ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omers (who also have subscribed to Applicant's app) on the Applicant's computer application does not amounts to supply by the Applicant The AAR in that ruling also held that the Applicant is not liable to collect and pay GST on the supply of goods or services supplied by the service provider (person who has subscribed to Applicant's app) to his customers (who also have subscribed to Applicant's app) on the Applicant's computer application. Further the AAR observed that with reference to Merriam Webster's Dictionary, the word through' is used as a function word to indicate means, agency, intermediary 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. In the instant case, it is observed that the applicant, because of their unique business model, merely co ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y has no role to play. The company does not act "on behalf of the driver" in collecting any fare from the passenger at all. Intent of the App Lead Generation for Driver and discovery of drivers for Customers. There is no Settlement to driver by the company at all. There is no collection of money from any passenger on behalf of the driver Treatment of supply through e-com The supply is not through the company or the app at all. The App is meant as a pure discovery platform to enable driver to provide services to the users and the company doesn't facilitate the mobility. Who arrives at the fare details? The fare is driver driven in terms of the proposed system. At the best Rapido may show a standard fare to empower the end user to understand what would be the standard fare for the ride involved. The company is not the provider of commuting services. The taxable supplies effected by the subscribers of the app platform of the applicant to their passengers by using the applicant's app platform, and not the applicant. The company is not providing any services on behalf of anyone at all. An e commerce operator, as specified, should supply the services through it. The services ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ration than expected, notification shall be sent to the customer to check if the ride is safe. * Sharing ride details Customers have the option to share the ride with anyone to make the ride safe. Upon sharing the ride, SMS or whatsapp message would be sent to the person with whom the ride has been shared by customer. * SOS It is proposed to have as part of the app, an SOS (Emergency call) button on the app that can be used by customers for reaching out to the team during any emergency throughout the ride. The option is visible to customers after the confirmation of a ride mid having opted for the pay per use safety option and this facility is available till the end of the ride app has an SOS button on the app that can be used by customers for reaching out to the team during any emergency throughout the ride. The option is visible to customers only after the confirmation of a ride until the end. In case of any emergency, the Pay per use customer have an option to reach out to the Emergency Response Team of Rapido or directly dial to the nearest Police station. In case this feature is used, calling to ERT or to the police station would be triggered. After the ride drop * ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , the Applicant's intent is to ensure the passenger's safety during the ride once the passenger avails the ride. However, the Applicant wishes to submit that the said feature has not been implemented till now. Accordingly, screenshots in relation to the same are not available with the Applicant. Further, basis market conditions and the Applicant's assessment, in case the Applicant implements the said feature in the future, it shall be offered to the passengers using the same infrastructure. 9.3 The Applicant herein submits that the details pertaining to the ride, i.e. start location, destination, fare initially shown and fare shown on completion of the ride is maintained by the Applicant to enable their submission to traffic and other police authorities on demand. In certain exceptional situations, where police authorities intervene as part of investigations concerning safety of passenger or any other issue or where such details are sought by various other Regulatory Authorities as per Narcotic Drugs and Psychotropic Substances Act, 1985 ("NDPS Act"), Customs Act, 1962, The Motor Vehicles Act, 1988 etc. the Applicant is required to submit the relevant information regarding the r ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ion interface includes a specific feature designed to allow Captains to notify the Applicant at the conclusion of each ride. This function is integral to ensure seamless operation of the Applicant's discovery platform service. 9.9 During the ride whether the App displays the route to the passenger While the Applicant is a mere lead generating platform, the Applicant displays the route to the passenger bearing in mind their safety and security as a discovery platform, as it is essential for us to ensure leads generated by our platform are safe for the passenger availing the ride. 9.10 : Whether on completion of ride the final price is displayed in the App. Applicant's Submission The application only displays limited information on completion of the ride, which is the fare initially agreed between the Captain and passenger. The Applicant asserts that while it has visibility of the fare initially agreed/ decided between the Captain and passenger, the Applicant neither has visibility about the actual price paid/settled between them nor is in any way concerned with collection of the consideration for supply from the users of Rapido'' or business associates of the Captains. FINDING ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent of the applicant in the supply of services by the drivers as well as arranging for collection of any consideration or any other form of agreed means of payment from the passengers. 14. The applicant also submitted some additional facts stating that they do not propose to collect any money from passenger or consideration towards the ride; they collect only subscription charges from the drivers for usage of the platform on raising invoice and discharge GST on the entire subscription charges; they do not act "on behalf of the driver" in collecting any fare from the passenger and thus they do not act as e-commerce operator; they neither provide drivers to the passenger nor act on behalf of the driver to get into any transaction with the passenger; there is no concept of settlement to the driver as they do not collect any money on behalf of the driver; the drivers provide mobility services to the passengers, but not the applicant and thus the said services are not through the app and therefore they do not provide e-com related services and do not act as an intermediary in providing the said service; the fare is driver driven and they show a standard fare as a measure to educate the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly 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 taxable territory shall be liable to pay tax: Provided further that where an electronic commerce operator does not have a physical presence in the taxable territory and also he does not have a representative to the said territory, such electronic commerce operator shall appoint a person in the taxable territory for the purpose of paying tax and such person shall be liable to pay tax. 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 ('Rapido' APP). for the supply of services. Thus the applicant squarely fits into the definition and qualifies to be an Electronic Commerce Operator. 18. Now we proceed to examine the charging section i.e. Section 9 (5) of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... diary 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. 20. In the instant case, as admitted by the applicant in his application and from the reply did 24.4.24 to clarification, the following facts are brought out:- (i) the applicant's App sends the information, pertaining to a specific ride that a passenger wishes to book to all the drivers within certain radius of the location of the passenger along with the standard fare: (ii) the driver(s) offer a fare to the passenger through the App; (iii) the passenger is at liberty to negotiate the fare with the driver through the App; (iv) if the driver agrees to the fare and accepts the ride fare, then the location of the passenger is forwarded to the driver through the App; (v) Ride fare is negotiat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of such services'. Here the supply of such service refers to the supply of services by way of transportation of passengers by a radio-taxi, motorcab, maxicab and motor cycle; as notified vide Notification 17/2017-Central Tax (Rate) dated 28.06.2017 issued under Section 9 (5) of CGST Act, 2017, and supplied through the electronic commerce operator. 22. In view of the foregoing we find that the applicant is squarely covered in the definition of electronic commerce operator and the supply of services by way of transportation of passengers by a radio-taxi, motorcab, maxicab and motor cycle is supplied through them. Further, by virtue 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. The applicant also proposes to introduce pay-per-use ride monitoring charge, an optional service provided to the passengers, to ensure the passenger's safety before the ride, during the ride and after the ride. The said service involves providing rider confidentiality of customer information, notifying route deviation, long waits, ride sharing, SOS, customer support on call for ensuring ..... X X X X Extracts X X X X X X X X Extracts X X X X
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