Hiveloop Technology Private Limited Vs Additional Director (Karnataka High Court)
The Karnataka High Court held that an e-commerce operator that merely provides a digital platform without collecting consideration for supplies made through it cannot be made liable to collect Tax Collection at Source (TCS) under Section 52 of the CGST Act. The Court observed that liability under Section 52 arises only where the operator collects payment on behalf of suppliers, and since the petitioner did not collect consideration, proceedings under Section 74 were without jurisdiction. The Court further ruled that the petitioner could not be treated as an “assessee in default” because GST law contains no provision similar to Section 201 of the Income Tax Act. It also rejected allegations relating to wrongful ITC availment under Section 17(2), holding that promotional activities undertaken for business expansion without consideration do not amount to exempt or free supplies. Consequently, the impugned show cause notice was quashed as illegal, arbitrary, and beyond statutory authority.
Facts:
M/s. Hiveloop Technology Private Limited (“the Petitioner”) operates an e-commerce portal ‘udaan’, facilitating B2B transactions between independent buyers and sellers. The Petitioner merely provided access to the platform and did not collect payment/ consideration for supplies made through it.
