In the case of M/s. Juspay Technologies Pvt. Ltd, Karnataka AAR has held that though Just Pay is an E-Commerce Operator (owning the App "Namma yatri") using which Drivers are providing Motor Car Service to their customers directly but he is not covered under provisions of Section 9(5) for payment of GST as applicable when such service is being provided through E-Commerce Platform. (Copy of the Order is placed at the end of the Article).
Brief Facts of the Case (Key Points)
Taxpayer has launched "Namma Yatri" app on ONDC platform. "Namma Yatri" is a ride-hailing SaaS platform (Software as a service) / Mobility as a service (MaaS) solution offered to the auto-rickshaw community of Bengaluru which includes a driver-side software and customer-side software. "Namma Yatri" is a software developed, owned and operated by Juspay.
They shall charge membership & subscription fee to the person enrolls by furnishing the application in the presubscribed form; they intend to discharge the output tax on the membership/ subscription fee received from the members registered for availing the benefits in Namma yatri App.
The subscriber i.e. Driver of the "NammaYatri" enters in to business deals/transactions on their own with their clients and business associates for supply of services, the terms and conditions governing such contracts of supply, such as quality, price, etc., are as mutually agreed upon by them and the E-Com Operator neither has a say/ a role in that regard nor the Applicant is involved directly or indirectly in such supply and providing of services as the case may be. The Applicant is not in any way concerned with collection of the consideration for supply from the clients / business associates of the subscribed suppliers. All such matters are only within the knowledge and domain of the subscribers of the "Namma Yatri" of the Applicant and their business clients and associates.
Taxpayer submits that on Namma Yatri the auto driver, after making payment of membership fee, becomes the registered member on the App; can publish the nature of services provided, nature of facilities provided or any other activity undertaken benefiting the users.
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;
(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:
Notification No.17/2017-Central Tax (Rate) dated 28.06.2017 as amended, 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..
(For inter-state also, necessary notification has been issued under IGST Act).
The tax on infra state supplies of notified services shall be paid by the e- commerce operator, in terms of Section 9(5) of the CGST Act 2017, only if such services are supplied through it (e-commerce operator platform). The crucial and relevant aspect of the section and its applicability are as follows:
The services by the supplier to the consumer are supplied through the electronic commerce operator.
As word through has not been defined in GST Act, the same should be understood from Dictionary meaning which is as:
a) From one end or side of something /somebody to the other
b) See, hear, etc. through something to see, hear, etc something from the other side of an object or a substance
c) From the beginning to the end of an activity, a situation or a period of time
d) Past a barrier, stage or test
e) Until, and including
The word through in Section 9(5) is used to indicate the method under which the supply of services was initiated, carried on and concluded. The dictionary meaning clearly specifies that the word through implies that the supply should be initiated, carried on and concluded by the specified method.
In the instant case the supply is not carried on and concluded by using their Namma Yatri' app; they invite attention to the facts furnished in their application as well as their submissions during the personal hearing, which are reiterated as under:
a) The applicant provides technology to auto drivers (through the APP). This allows the passenger to identify the nearby auto through which he can take the ride and no further
b) The ride is not monitored by the applicant
c) The fare and the method of its collection is not known to the applicant.
d) The fare is not collected through the applicant
e) The applicant is not responsible to the supplier for non-receipt of the consideration for the supply
f) The applicant is not responsible to the consumer for deficiency on the part of the supplier in rendering of the services.
Accordingly, they are not covered in Section 9(5) of the CGST Act.
Key Findings and Discussions by the Authority (Our Interpretation)
Regarding whether Taxpayer is E-Commerce Operator
It could be inferred from the definitions supra (Section 2(44) & (45)) that Electronic Commerce Operator (ECU) 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 (`Namma Yatri' APP), for the supply of services. Thus the applicant squarely fits into the definition and qualifies to be an Electronic Commerce Operator.
Regarding Covered under Section 9(5) for payment of GST
The word "through" in Section 9(5) is not defined in the relevant context and hence we proceed to discuss the meaning of the said word/phrase.
In this regard, we invite reference to Merriam Webster dictionary, in accordance to which the word 'through' is used as a function word to indicate means, agency, intermediacy such as bu means of, bu 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 connects the auto driver and passenger and their role ends on such connection; they do not collect the consideration; they have no control over actual provision of service by service provider; they do not have the details of the ride; they do not have control room/call centre etc. 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 operational and completion of the ride.
Thus it is observed that supply of services are not through the electronic commerce operator, but are independent. Therefore, the applicant does not satisfy the conditions of Section 9(5) for the discharge of tax liability by Electronic Commerce Operator. Thus, the applicant, though qualifies the definition of being an e-commerce operator, is not the person liable for discharge of tax liability under Section 9(5) of the CGST Act, 2017.
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Copy of the Order
Disclaimer: We did interpretation of Respected Authority Decision for purely academic purpose. In case, there is any mistake in understanding of the order, we are apologised to the Authority.