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TMI Blog2024 (10) TMI 194X X X X Extracts X X X X X X X X Extracts X X X X ..... Regulations, 2018. 1.1 At the outset, we would like to make it clear that the provisions of the Central Goods and Services Tax Act, 2017 (the CGST Act, for short) and the West Bengal Goods and Services Tax Act, 2017 (the WBGST Act, for short) have the same provisions in like matter except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the WBGST Act. Further to the earlier, henceforth for the purposes of these proceedings, the expression 'GST Act' would mean the CGST Act and the WBGST Act both. 1.2 The applicant is a society registered under the West Bengal Societies Registration Act, 1961 which is a non-profit organisation who is engaged as a research and development organisation under the Department of Information Technology & Electronics, Government of West Bengal and is inter-alia engaged in the development of language tools & technology as well as Online Literary & Linguistic resources etc. 1.3 The applicant, under the direction of the Government of West Bengal, has developed a website and mobile application named "Yatri S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es by means of four wheeler or two wheeler vehicles. On the other hand, the Customer-side App is intended for customers to connect with drivers for their transportation needs. Through this dual-application system, the App effectively links customers with available drivers. The ownership and management of the Yatri Sathi Mobile App rest solely with the applicant. The App's development and ongoing operations are overseen by the applicant, ensuring compliance with the directives and standards set forth by the Government of West Bengal. 2.3 The applicant further submits that any driver wishing to avail the services of the App is required to download the App and register for and maintain an active personal user account. For integrating the driver vehicle and on-boarding as a Driver on a platform, driver must complete the registration process on the Driver App. As part of this application process, drivers are required to upload specified documents as needed. Upon submission of the application, the granting of a license to use the App is contingent upon acceptance of the terms and conditions set forth between the Applicant and the driver (hereinafter referred to as the "Driver's ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cant cites the provisions of Section 9 (1) of the GST Act read with Section 5 (1) of the IGST Act being the principal charging provision of tax which envisage that tax shall be charged on supply of goods or services or both and shall be paid by the taxable person. The Applicant also cites the definition of "taxable person" as per Section 2 (107) of the GST Act which means a person who is registered or liable to be registered under sec 22 or sec 24 of the GST Act and argues that provisions under Sections 22 and 24 of the GST Act reveal that the term "person" refers to the supplier of goods or services. Accordingly, it is the supplier, as defined in Section 2 (105) of the GST Act, who is liable to tax under the relevant provisions of the Act. 2.6 The main content of the Applicant is that it is the person who supplies the goods or services or both including his agent shall be liable to pay tax. The specific scenario at hand involves the Driver providing services to customers via the App where the App serves only as a digital platform facilitating the connection between the Driver and the customers and hence the Applicant is merely a facilitator, and not the direct provider of any tra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eelers and two wheelers vehicles which falls under the ambit of "motorcab" defined in sec 2(25) of the Motor Vehicle Act, 1988 and "Motor cycle" defined in sec 2(27) of the Motor Vehicle Act, 1988. 2.8 In order to establish his case whether the Applicant falls under the purview of "Electronic Commerce Operator" as defined in Section 2 (45) of the GST Act and whether transportation of passenger services are supplied through electronic commerce platform, the Applicant has referred to the relevant terms and conditions entered between Applicant and the Driver and entered between the Applicant and Customer separately in order to understand the role of the Applicant and its responsibility. The said Terms and Conditions as cited by the Applicant are represented separately as below: "DRIVER'S TERMS AND CONDITIONS - 3.13 Yatri Sathi shall not be responsible for any cancellation or refusal of provision of Driver Services. 3.14 Yatri Sathi helps Customers to locate Drivers willing to offer the Driver Services. 3.16 The Driver shall be solely responsible and liable for: * any failure to complete a ride by the Driver; * any failure to pick up Customer(s) at the allotted time and/or pla ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ny shall not be responsible for non-receipt of fare by you from your Customer(s). 9. Limitation 9.3 The Company is not responsible for the behavior, actions or inactions of the Driver or quality of the Vehicle or Driver Service. Any contract for the provision of Driver Services is exclusively between the Customer and the Driver and the Company is not a party to the same." "CUSTOMER'S TERMS AND CONDITIONS - 2. Software 2.1. The software will enable you to find taxis of Drivers who are willing to offer their services. 2.4 Company bears no responsibility and liability for delays and losses suffered by you or caused to you as a consequence of the breakdown of the Vehicle or refusal of ride by the driver. 3. Payment 3.1 You shall be required to pay charges to the Driver for the services used by you either by paying cash or through UPI, to the driver directly. The estimated rate of the services shall be notified to You while placing the booking request on the Yatri Sathi App. 10. Limitation of Liability COMPANY SHALL NOT BE LIABLE FOR INDIRECT, INCIDENTAL, SPECIAL, EXEMPLARY, PUNITIVE OR CONSEQUENTIAL DAMAGES, INCLUDING LOST PROFITS, LOST DATA, PERSONAL INJURY OR ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ) Applicant has no responsibility or liability to customer related to any ride or services provided by the driver. [Clause 10 C] 2.10 The Applicant also states that in order to qualify as an electronic commerce operator as per the provisions of Section 2 (45) read with Section 2 (44) of the GST Act, a person must meet the criteria of owning, operating, and managing a digital or electronic platform and that such platform must be created for the supply of goods or services, or both, over an electronic network, which constitutes electronic commerce. 2.11 In this context, the applicant argues that although the applicant does own, operate, and manage the platform, its role is limited to facilitating the connection between customers seeking transportation services and drivers willing to provide these services. The applicant's platform does not engage in the supply of goods or services, a critical requirement for classification as an electronic commerce operator under the aforementioned definitions. This fact is corroborated by the terms and conditions agreed upon with both customers and drivers, wherein the Applicant explicitly disclaims responsibility for the services provided by ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rovision of service by service provider; Applicant do not have the details of the ride. In legal judgments and interpretations, the word "through" suggests that the services provided are done so via the infrastructure, control, or management of the electronic commerce operator. It denotes a deeper integration and responsibility of the operator in the transaction, which may encompass regulatory compliance and even liability for service quality. For an operator to be deemed to supply services "through" its platform, there must be evidence of an integrated role in the transaction process, beyond just connecting the service provider and the customer. Therefore, the interpretation of "through" directly influences the determination of tax liability, depending on the nature and extent of the operator's participation in the service provision. 2.14 Therefore, in the present case, the Applicant's platform being only a facilitator between drivers and customers and not being engaged in or control the actual provision of transportation services, the Applicant's platform cannot be categorized as an electronic commerce operator as defined under Section 2 (45) of the GST Act and that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of their geographical location/position. The interpretation of Radio taxi squarely matches with the nature of services provided by the applicant. As such in any kind of services of like nature, the positioning of the cab and the customer and connecting them are the most essential part of such service. The 5% GST is applicable under Section 9 (5) of the GST Act, which mandates ecommerce operators such as ride-hailing platforms. It is submitted by the applicant that the app has been launched on the ONDC platform and is designed as ride-hailing software. 3.5 In light of the submissions as noted above, the applicant shall be liable to collect and pay GST on the services supplied by it as ECO. 4. Observations & Findings of the Authority 4.1 We have gone through the records of the issue as well as submissions made by the authorized representatives of the applicant during the course of personal hearing. We have also considered the submission made by the officer concerned from the revenue. The issue before us is to determine the following issues: * whether the applicant falls under the purview of the E-commerce Operator as defined in section 2 (45) of the GST Act; * whether the appl ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service). The drivers get registered under the App on payment of membership charges & subscription fee and on the basis of representations and warranties provided by the driver, the applicant enters into an agreement with the driver to enable the driver to provide the service in accordance with the terms and conditions as specified in the respective agreements. 4.5 The applicant has submitted that the "Drivers Terms and Conditions" of the license to use the App establishes that the nature of agreement/contract is limited to providing licence or permission to use the App where the subscriber of the App enters into business deals/transactions on their own with their clients and business associates for supply of services. The terms & conditions governing business contracts of supply such as quality, price etc., are mutually agreed upon by the user i.e. the driver and his client/customer i.e. the passenger who books a ride through the App. The applicant does not have role in controlling such quality, price etc. and is by no means involved either directly or indirectly in supply of services. The applicant is not concerned with the collection of the consideration for such supplies. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... his issue, it would be apposite to reproduce the provisions of the GST Act where the expression 'electronic commerce' and 'electronic commerce operator' has been defined and also the provision which makes an electronic commerce operator liable to pay tax in respect of certain supplies of services made through it. "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; 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 repr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... this regard, the applicant himself has referred to Merriam Webster Dictionary, in accordance to which the word "through" is used as a function word to indicate means, agency, intermediary such as by means of, by 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 end, to and including etc. The term "through" in the context of legal interpretation, particularly with respect to provisions like Section 9 (5) of the CGST Act, typically implying a level of involvement or facilitation by the electronic commerce operator that is substantial enough to consider the service as being provided via the operator's platform. This may include significant involvement in the processes of booking, payment handling, and ensuring service delivery. 4.13 Thus the applicant argues that the word 'through' in Section 9 (5) of the GST 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. In the instant case, it is observed that the business model promulgated by the applicant is unique where it merely ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n e-commerce operator, does not satisfy the conditions of Section 9 (5) of the GST Act for discharging the tax liability by an electronic commerce operator and hence, is not the person liable for discharge of tax liability under section 9 (5) of the GST Act. In view of the above, we rule as under: RULING Question 1: Whether the Applicant falls under the purview of the E-commerce Operator as defined in sec 2 (45) of the GST Act? Answer: The applicant very much fits into the definition of E-commerce Operator as defined in sec 2 (45) of the GST Act and qualifies to be an Electronic Commerce Operator. Question 2: Whether the Applicant shall be deemed to be the service provider u/s 9 (5) of the GST Act read with notification no. 17/2021-Central tax(rate) dated 18th November, 2021 for the Driver services provided by the Driver to the Customer connected by "Yatri Sathi Mobile App"? Answer: The supply by the service provider (driver) to his customers (passengers) through Yatri Sathi App does not amount to supply by the Applicant. Question 3: Whether Applicant shall be liable to collect and pay GST on the services supplied by the Drivers (person who subscribed the app) to the Custome ..... X X X X Extracts X X X X X X X X Extracts X X X X
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