The AAR ruled that the digital platform of the applicant qualifies as an e-commerce operator under Section 9(5) of the CGST Act
The Authority for Advance Rulings (AAR) has ruled that a mobile application connecting service providers with potential customers qualifies as an ‘e-commerce operator’ under Section 9(5) of the Goods and Services Tax Act, 2017 (GST Act). Consequently, the platform is liable to pay GST on notified services booked through their app.
Vyavshay, a mobile application, connects service providers with potential customers. It functions as a platform where users can search for desired services, book appointments, and potentially make payments.
The applicant contested their classification as an ‘e-commerce operator’ under the GST Act, arguing they were merely facilitators and not involved in core aspects of the service transactions. They elaborated on their role as a platform, stating they had no control over pricing, collection, or delivery.
Additionally, Jugal Dushar and Deepak Jain. G., the authorised representatives of the applicant, highlighted that their charges were based on app usage, separate from the service value. They also stated that they were only involved in linking the supplier of services and the end customer for availing of such services. The supply happens independently of the applicant, and the applicant doesn’t take any responsibility of any kind. The consideration is also directly charged by the service provider to the recipient and Vyavshay has no involvement in price fixation for the service provider.
The applicant further argued that the service doesn’t fulfill the conditions stipulated in Section 9(5) of the GST Act 2017, which is ‘supply of services through it’, as there is no supply that is under the control of the applicant or routed through it. Thus, the applicant cannot be held liable to collect and pay the tax as specified in Section 9(5) of the CGST Act 2017. The applicant’s nature of business does not allow collection of the fare on behalf of the supplier.
The AAR bench observed that the applicant facilitates the partner or service provider in supplying their service to the end user by making use of the app maintained by them and enabling the user to get door-step service. Hence, the applicant squarely fits into the definition and qualifies to be an electronic commerce operator.
The bench of D. Jayapriya and A. Valli further observed that “Section 9(5) of the Act of 2017 creates a statutory obligation on the electronic commerce operator, considering them as the deemed suppliers in respect of certain notified services supplied through the online platform maintained by them. It is very important to note that the language employed in Section 9(5), viz., “shall be paid” and “as if he is the supplier liable for paying the tax’’, makes it clear that the liability to pay tax on the supply is mandatorily placed on the e-commerce operator.”
The Authority ruled that the digital platform of the applicant qualifies as an e-commerce operator under Section 9(5) of the CGST Act. This classification makes the applicant liable to pay GST on notified services booked through their app.