Ride-Hailing Application Developer not liable to discharge GST Liability for Cab Services by Drivers: AAR [Read Order]

The Authority For Advance Ruling, West Bengal ( AAR ) recently ruled that the Developer of Yathri Sathi app, an intermediary enabling ride-hailing service between drivers and customers is not the entity required to discharge Goods and Services Tax ( GST ) liability on cab services rendered by drivers registered within the Application.

The Application for 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.

Uncover Section 50C Best Practices: Expert-Led Course, Click here

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 and customers who seek to avail such service. Interested drivers register themselves with the Applicant by paying a one-time subscription fee and registering with the Applicant’s app.

A key issue sought to be discerned by AAR was whether the Applicant, NLTR shall be liable to collect and pay GST on the services supplied by the registered Drivers to the Customers.

NLTR submitted before AAR that for an e-commerce to be vested with GST liability as per Section 9(5) of the GST Act, 2017, the following conditions have to be fulfilled:

• The categories of the services shall be specified by notification, on the recommendation of the Council, by the Government.
• The supply of such specified services shall be intra-state supplies.
• The supply of such service is through the electronic commerce operator.

The Applicant supplemented its submissions by contending that Section 9(5) of the GST Act can only be attributed in the event that the facilitation conducted by the e-commerce operator is substantial enough to consider the service as being provided via the operator’s platform itself.

In the present case, the applicant is merely connecting the driver and passenger and their role ends therein. Applicant submits that they have no actual control of the provision of service by the driver, nor are they paid any remuneration for the ride, which is paid by the Customer directly to the Driver.

The two-member Bench of AAR composed of Tanisha Dutta, Joint Commissioner, CGST & CX and Joyjit Banik, Additional Commissioner, SGST observed that, “tax on intra-State as well as inter-state supplies of services by way of transportation of passengers by a motorcab, maxicab, motorcycle, or any other motor vehicle except omnibus shall be paid by the electronic commerce operator if such services are supplied through it.”

Uncover Section 50C Best Practices: Expert-Led Course, Click here

The Bench echoed the Applicant’s submissions of being a mere platform to connect the independently-operating driver and customer, not conducting any other supervisorial or managerial functions in the process.

In light of the findings and material on record, AAR ruled that the applicant does not satisfy the conditions of Section 9(5) of the GST Act, 2017 for the discharge of tax liability by an e-commerce operator and is therefore not the requisite person liable for discharge of GST therein.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates