The chief issue sought to be addressed by AAR was whether the Applicant could be classified as an ‘electronic commerce operator’ under the GST Act

The Authority For Advance Ruling, West Bengal ( AAR ) ruled that the Developer of Yathri Sathi app cannot be deemed as the provider of cab service rendered to customers by drivers registered on the Applicant’s ride-hailing application. The Application for an Advance Ruling was filed by Natural Language Technology Research ( NLTR ), a non-profit organization engaged by the Department of Information Technology and Electronics, Government of West Bengal to conduct research and development of language tools & technology, and in the expansion of Online Literary & Linguistic Resources. The Future of Tax and Finance: Upskill with Us As per the directives of the Government of West Bengal, the Applicant developed a website and allied mobile application by the name of “Yatri Sathi Mobile App” ( App ), built as per the common network standards required by the Open Network for Digital Commerce ( ONDC ) platform. The App is a ride–hailing platform serving as an intermediary between drivers willing to provide cab services and customers who seek to avail the same. One of the queries raised by the Applicant  before AAR was whether the cab service rendered by registered drivers to passengers, facilitated by the Yathri Sathi App would be deemed a supply of Service by the Applicant as per Section 9(5) of the Goods and Services Tax ( GST ) Act, 2017 read with Notification no. 17/2021-Central Tax (Rate) The Future of Tax and Finance: Upskill with Us It was submitted by NLTR that both, Drivers and Customers are required to complete a registration process on the app subsequent to which they shall be able to make use of the functions of the application; the drivers pay a one-time membership and subscription fee to register themselves on the platform and are required to make representations and warranties by means of an agreement entered into with the Applicant for the provision of cab services using the Applicant’s platform, in accordance with stipulated terms and conditions ( T&C ). The two-member Bench of AAR composed of Tanisha Dutta, Joint Commissioner, CGST & CX and Joyjit Banik, Additional Commissioner, SGST observed that for the applicant to be taxed as per Section 9(5) of the GST Act, 2017, it should be assessed whether the Applicant does in fact render services by means of the App. It was contended by the Applicant that although the app has been designed as a Software as a Service ( SaaS ), the principal service of supply of cab service is provided by the registered drivers to the customers; the Applicant does not receive any form of reimbursement from either party barring the one-time registration fees received from the Drivers. The Future of Tax and Finance: Upskill with Us The Applicant laid reference to the T&C which imposes complete liability on the Drivers for the provision of the cab service. Further, the remuneration for the cab service is determined by the West Bengal Transport Department and directly paid by the Customers to the driver by any payment methods accepted by the Driver. In light of the contentions raised by the Applicant, AAR ruled that the Applicant is not the supplier of the primary service and thereby fails to satisfy the conditions of Section 9(5) of the GST Act, 2017 for discharge of tax liability by an electronic commerce operator.