GST on E-Commerce Aggregator Models: Why Uber is Treated as Supplier but Amazon is Not

Uber and Amazon are quite known to everyone. Both companies are based in America and have a large customer base in India. In this 21st century, people like to divide this to pre-covid and post - covid. Actually, after covid, the usage of technology has increased. The usage of both platforms like Uber and Amazon has climbed up. Not only these two but many food delivery applications.

So, it’s normal that the company has to pay the tax, which is indirectly collected from the customers. As it is a settled principle that, GST applies when there is a supply of goods or services. Coming to E-commerce, where the company only provides the platform, how does GST work? Who pays the GST.

Both Uber and Amazon are providing you the platform. In the case of Uber, the driver has to register and the customer also has to register. In the case of Amazon, it is the same as Uber, where both the customer and the supplier have to register on the platform. But, under GST, Uber is treated as a ‘Deemed Supplier’. Let’s know why.

E- Commerce Industry

Before going into the indepth of the taxation treatment, it would be better to know what the e-commerce industry is and what are the models. The first one is the ‘Market place model’. In this model, the platform acts as an intermediary. For example, Amazon, Flipkart..etc. In this model, the GST remains with the seller. The platform only collects TCS under Section 52.

In the market place model, the platform only facilitates the transaction between the supplier of goods or services and the potential customers, without keeping any inventory of the goods. The revenue is the platform fee, ad fee.etc.

The second model is the ‘Inventory-based Model’. In this model, the platform owns the inventory itself and sells directly to customers. The best example for this model is the Tata cliq, Zara, Bigbasket..etc. The goods of different brands are bought and supplied through the stores and its platforms. The prices are finalised by the economic commerce operator and the supplier has no final decision on that. In this situation, the revenue is the margin they get after the sale.

And finally, it is the aggregator model. Companies like Uber, OYO, and Swiggy come under this model. Section 9(5) of the CGST Act, 2017 shifts the duty to pay GST from the actual service provider to the Electronic Commerce Operator (the aggregator) for specific categories of services that the government notifies.

Section 9(5) - Legal basis for GST Treatment

As per Section 9(5) of the CGST Act, 2017, the central government can notify categories of services where the e-commerce operator (ECO) is treated as if it is the supplier of the service and is liable to pay GST on the full value of supply when such services are supplied through the platform.

However it is to be noted that this “deemed supplier” concept applies only to notified services and not to all transactions on a platform.

As per the notifications, the Services include passenger transportation by radio-taxi, motor cab, maxi cab, and motor bike, the GST has to be paid by the E-commerce operator. It is important to note that in the case of taxi business, cab-owners need not to get registered under GST even if his turnover exceeds the threshold limit.

However, in the case of a hotel (accommodation) business, if the turnover exceeds the threshold limit, the hotel owner needs to get registration for GST. If the hotel is registered under GST, the E-commerce operator is not liable to tax.

The services notified under Section 9(5) are:

1. Transportation of Passengers:include passenger transportation by radio-taxi, motor cab, maxi cab, and motor bike.
2. Accommodation Services: Services including the provision of lodging at hotels, inns, guest homes, clubs
3. Housekeeping Services: services like plumbing, carpentry, and so forth.
4. Restaurant services: supply of restaurant service other than the services supplied by restaurant, eating joints etc. located at specified premises.

Treatment of Input Tax Credit

The GST has provided a different treatment of ITC for ECOs who are made liable to pay tax as deemed suppliers under Section 9(5) of the CGST Act. This has been clarified by CBIC Circular No. 167/23/2021-GST.

The Circular makes it clear that even when such inputs and input services like advertising, brand marketing, app development, cloud infrastructure, or platform maintenance are utilized to enable supply on which the ECO pays GST as a presumed supplier, there is no need to reverse common ITC.

Also, the circular mandates that the entire GST liability on such supplies must be paid exclusively through the Electronic Cash Ledger of the ECO. The utilisation of ITC from the Electronic Credit Ledger for this purpose is prohibited.

For aggregators, this requirement impacts working capital and cash flow. ECOs are required to pay cash for the tax on notified supplies, such as passenger transportation or restaurant services, even though they may have large accumulated ITC because of high input prices.

Although ITC cannot be utilised to discharge tax liability under Section 9(5), it is not lost. The ITC availed by the e-commerce operator can be used to pay GST on its own taxable supplies, such as commission, platform fees, or convenience charges levied on vendors or customers. This results in a dual compliance framework, where the Section 9(5) liability is paid in cash, while the ECO’s own service-related GST is discharged through ITC.

Why Uber is Treated as ‘Supplier’ and Amazon Not

Uber, Ola, and other taxi services have been classified under Section 9(5) as e-commerce firms that provide passenger transport services through their digital platforms. These companies work as an ‘Aggregator model.’

The aggregator is in the position of facilitating the transactions completed through ECO's platform even though it does not directly deliver the services.

As per the government notification, the passenger transport services were explicitly notified under Section 9(5), making the aggregator liable to pay GST (e.g., 5% on rides).

Even if Uber shifted to subscription-based models (where drivers pay a fee to the platform and riders pay drivers directly), certain advance rulings have held Uber liable for GST under Section 9(5), because the transport service is furnished through the Uber platform and the platform meets the definition of an ECO.

But unlike Uber, Amazon works on a market model. Section 9(5) of the GST Act does not apply to the services that Amazon currently offers. The marketplaces like Amazon host lots of third-party sellers, but GST liability is not automatically transferred to the marketplace under Section 9(5) unless the service provided falls into a category listed under the section (e.g., passenger transport, restaurant, accommodation, housekeeping).

Under GST, the real provider (seller) is responsible for paying GST on goods sold through Amazon, Flipkart, and other platforms. The marketplace operator is not considered the deemed supplier for GST liability on the fundamental products or services supplied by sellers, but it is required to collect Tax Collected at Source (TCS) under Section 52 on the net value of supplies made via it.

While concluding, Uber is an example of a platform that actively supports transportation. In the instance of Amazon, the platform offers products and helps with the logistics of sales, but the supply of goods stays with the individual seller and is not a notified service under Section 9(5). Therefore, Uber is a supplier under GST and Amazon is not even though both are E-commerce operators.

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