In Re: M/s. OPTA Cabs Private Limited
GST
2018 (12) TMI 711 – APPELLATE AUTHORITY FOR ADVANCE RULING, KARNATAKA – 2019 (20) G. S. T. L. 161 (App. A. A. R. – GST)
APPELLATE AUTHORITY FOR ADVANCE RULING, KARNATAKA – AAAR
Dated:- 4-12-2018
KAR/AAAR/04/2018-19
GST
SHRI. A.K. JYOTISHI, AND SHRI. M.S. SRIKAR, MEMBER
Represented by: Sri Chandrashekar Reddy, Managing Director
PROCEEDINGS
(Under Section 101 of the CGST Act, 2017 and the KGST Act, 2017)
At the outset we would like to make it clear that the provisions of both CGST, Act 2017 and SGST, Act 2017 are in pari material and have the same provisions in like matter and differ from each other only on a few specific provisions, Therefore unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the KGST Act.
The present appeal has been filed under section 100 of the Central Goods and Service Tax Act 2017 an
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elf directly from the customer on the completion of the trip either through cash or through e-payment.
3. The appellant filed an application for Advance Ruling under section 98 of the CGST Act, 2017, and KGST Act, 2017 on the question as to whether the money paid by the customer directly to the driver of the cab for the service of the trip is liable to GST and whether the applicant is liable to pay GST on this amount.
4. It was decided by the Karnataka Advance Ruling Authority vide Ruling No. KAR/ADRG 14 OF 2018 July 27, 2018 = 2018 (8) TMI 933 – AUTHORITY FOR ADVANCE RULINGS, KARNATAKA that GST is leviable on the amounts billed by the appellant on behalf of the taxi operators for the services provided in the nature of transportation of passengers through it.
5. Aggrieved by the said Ruling of the Authority (herein after referred to as 'impugned order'), the appellant has filed an appeal under section 100 of the CGST Act, 2017 and KGST Act, 2017 on the following grounds.
i. T
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ellant Viz. OPTA shall provide a receipt of the total ride fee payable by customer at the end.
v. Section 9(5) of Central Goods and Service Tax Act 2017 states that:
“(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:
Provided that where an electronic commerce operator does not have a physical presence in the taxable territory, any person representing such electronic commerce operator for any purpose in the taxable territory shall be liable to pay tax:
Provided further that where an electronic commerce operator does not have a physical presence in the taxable territory and also he does not have a representative i
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able in case services are not supplied through it. Hon'ble authority failed to make a distinction between such services being “supplied” through it as against such services being “booked” through it. In case of the words “supplied”, there has to be a “continuous link” of provision of service from start to end and there should be complete responsibility of the deemed supplier.
vii. OPTA model services of taxi are not supplied through it, due to following reasons:
* There is no privy of contract on account of payment between OPTA and customer. Customers pay directly to taxi drivers; and
* OPTA does not charge any trip commission from taxi drivers. Thereby there is no flow of consideration on account of any particular trip undertaken by the said taxi driver. OPTA charges monthly rentals to taxi driver for usage of IT platform. The responsibility of OPTA is limited to providing a stable and fully functional IT platform to taxi drivers, and provision of taxi driver services is the so
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service provided by OPTA is limited to IT platform service and is not required to be taxed under section 9(5) of the CGST Act, 2017 and prayed to set aside / modify the impugned advance ruling passed by the authority for advance ruling.
DISCUSSIONS AND FINDINGS
9. We have gone through the records of the case and taken into account the submissions made by the Appellant in their written submissions as well as at the time of personal hearing. Briefly stated the facts are that the Appellant is in the business of operating taxi aggregation service wherein the Appellant provides an IT platform whereby services of information technology is provided to both the customers and the taxi operators for the usage of service. The business model of the Appellant is that a potential customer would book the taxi by using the IT platform provided by the Appellant and the taxi operator would be intimated about the potential customer through the same IT platform. On completion of the journey, the Appel
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including digital products over digital or electronic network.
As per Section 2(45) of the CGST Act, 2017, electronic Commerce operator means any person who owns, operates or manages digital or electronic facility or platform for electronic commerce.
In the instant case the transportation of passenger service is provided by the taxi drivers by using a software application. Transportation of passengers is a taxable service liable to GST. The provision of this service by the taxi driver to the passenger is a 'supply' within the scope of supply given in Section 7 of the CGST Act since the service is provided for a consideration. The Appellant on the other hand has developed a digital platform which aggregates the taxi drivers on one common platform. The service of transportation of passengers is supplied by the taxi drivers using the digital application developed by the Appellant. The Appellant manages the digital application which facilitates the supply of the service of transportatio
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otification, 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.”
13. Under the provisions of sub-section (5) of section 9 of the CGST Act and Notification No. 17/2017 – Central Tax (Rate) dated 28th Junes 2017 was issued whereby, the services by way of transportation of passengers by a radio-taxi, motorcab, maxicab and motor cycle was notified as the category of services, the tax on intra-State supplies of which shall be paid by the electronic commerce operator.
14. Section 9(5) of the CGST Act shifts the liability to pay the tax from the actual supplier of the notified services to the e-commerce operator. The provisions of Section 9(5) Of the CGST Act do not in any way imply that the Supplier of
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In this case, booking for a taxi ride on the digital application is a part of the activity of the supply of the service of transportation of passengers. Without the booking no service can be supplied. Every supply begins with a request for the supply. The request can be in the form of a written request like a purchase order, a verbal request or a request made on the digital application which is in the nature of 'booking'. Honouring such requests by the supplier of the goods or services, in return for a consideration, is the taxable event of 'supply'. Therefore, booking for a service is also an integral part of the supply chain and hence there is no merit in the argument of the Appellant that the service has merely been 'booked' on their platform and not 'supplied through it'. We reiterate here that the supply of the service of transportation of passengers has been provided 'through' the digital platform and by virtue of the provisions of Section 9(5) of the CGST Act, the e-commerce op
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