Whether the applicant is liable to pay tax for the supply of
services by another person through the e-commerce platform operated by the
applicant
Authority For Advance
Rulings - Karnataka
Advance Ruling No. KAR
ADRG 58/2019 Date: 19th September, 2019
M/s Humble Mobile
Solutions Pvt. Ltd., Bengaluru
Summary of Advance
Ruling: The applicant sought an advance ruling to determine
if they are liable to pay tax for the supply of services by another person
through their e-commerce platform.
Facts of the Case:
- The applicant operates a
technology-based electronic platform service called “DriveU” which
connects customers with drivers for on-demand services.
- The drivers are independent service
providers who are screened and trained by the applicant but are not
employees of the applicant.
- The applicant facilitates the
provision of services between the drivers and customers and charges a
convenience fee to the drivers.
Relevant Sections:
- Section 97 and Section 98(4) of the
CGST Act, 2017
- Section 97 and Section 98(4) of the
KGST Act, 2017
- Section 9(5) of the CGST Act, 2017
- Notification No. 17/2017-Central Tax
(Rate)
- Section 194C of the Income-tax Act,
1961
- Section 52 of the CGST Act, 2017
Question Raised:
- Whether the applicant is liable to
pay tax for the supply of services by another person through the
e-commerce platform operated by the applicant.
Submission by Applicant:
- The applicant argued that they are
not liable to pay GST on the services provided by the drivers through
their platform as they are only facilitating the provision of such
services.
- They stated that only three
categories of services have been notified under Section 9(5) of the CGST
Act, which includes services by way of transportation of passengers,
accommodation services, and housekeeping services.
- Since driving services are not listed
under these categories, the applicant should not be liable to pay tax for
these services.
Finding by Ruling
Authority:
- The Authority examined the business
model of the applicant and identified three supplies involved:
1. Providing
drivers to consumers.
2. E-commerce
services to the drivers.
3. Provision
of manpower service by the drivers to the consumers.
- It was found that the applicant acts
as an intermediary and is not directly providing the driving services.
- The applicant’s role is to facilitate
the connection between drivers and customers and to collect service
charges for the use of the platform.
Ruling:
- The applicant is not liable to pay
GST on the services supplied by third-party drivers through their
platform.
- The tax liability falls on the
drivers as they are the service providers.
- The applicant is required to collect
tax at source (TCS) when they collect consideration on behalf of the
drivers.
Conclusion:
- M/s Humble Mobile Solutions Pvt. Ltd.
is not liable to pay GST on services provided by the drivers through the
“DriveU” platform.
- The GST liability rests with the
individual drivers, and the applicant’s responsibility is to collect tax
at source when applicable.
Disclaimer: All the
Information is based on the notification, circular and order issued by the
Govt. authority and judgement delivered by the court or the
authority information is strictly for educational purposes and on the
basis of our best understanding of laws & not binding on anyone.
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