In re Humble Mobile Solutions Pvt. Ltd. (GST AAR Karnataka)
Whether the applicant is liable to pay tax for supply of services by another person through the e-commerce platform operated by the applicant?
The activity of supply of the applicant is examined and it is seen that there are three supplies involved in the entire transactions – first supply is providing drivers to the consumers, second supply is that of e-commerce services to the drivers and the third supply is the provision of manpower service by the drivers to the consumers.
Regarding the first supply, i.e. providing drivers to the consumers, the applicant is only acting as an intermediary through the e-commerce platform, wherein the consumers who are in need of drivers would log in to the portal and select the driver. The drivers are listed in the e-commerce platform and the contract is between the drivers and the consumers, with the applicant acting as a facilitator. In some cases, the consideration for this service is received by the applicant on behalf of the drivers and the same would be paid to the drivers. Hence the applicant is not providing drivers to the consumers but only facilitating the consumers and drivers to come together for provision of service.
Regarding the second supply, the supplier of services is the e-commerce platform service provider i.e. the applicant in the instant case and the recipient of the supply of service is the driver as he is the person liable to pay the consideration. The applicant is collecting service charges for the usage of electronic commerce platform like listing services, payment collection etc. and the applicant has admitted GST liability on the above service charges collected and declaring the same in the returns. This turnover is not subject matter of this application for advance ruling and hence not considered.
Regarding the third service, it is found that the applicant is operating an electronic commerce platform and is providing a platform for the obtaining the services of drivers by the consumers. The drivers are not employees of the applicant and are independent persons who provide the services to the consumers and the consumers are liable to pay the consideration for the services to the drivers. Further, as observed from the submissions of the applicant, the consumers have the option either to pay the consideration directly to the driver or make payment electronically to the applicant and the applicant makes the payment so collected to the drivers. The drivers, being independent persons, have the option to enter into the contract and the customers have the choice of the drivers, hence they act on principal to principal basis and the applicant is only a facilitator for the supply of the services by the drivers to the customers and is charging a fee for the services provided from the drivers. The drivers are the suppliers of services which are separate supplies and the treatment of the taxability of this transaction is not a subject matter of the advance ruling. However, it is pertinent to note that section 9(5) of the CGST Act 2017 does not shift the liability of these services provided by the drivers from the drivers themselves to the e-commerce operator.
The applicant is not liable to pay tax for the supply of services by drivers through the e-commerce platform operated by the applicant, but he is liable to pay tax on the services provided to the drivers. Further, the applicant is liable to collect tax under section 52 on the net value of taxable supplies made by the drivers through it where the consideration with respect to such supplies is to be collected by the applicant.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, KARNATAKA
1. M/s Humble Mobile Solutions Private Limited, (called as the ‘Applicant’ hereinafter), having GSTIN number 29AADCH6500J1ZK, has filed an application for Advance Ruling under Section 97 of the CGST Act, 2017 read with Rule 104 of the CGST Rules 2017 and under Section 97 of the KGST Act, 2017 read with Rule 104 of the KGST Rules 2017, in FORM GST ARA-01 discharging the fee of Rs.5,000/- each under the CGST Act and the KGST Act.
2. The Applicant is a Private Limited Company and is registered under the Goods and Services Act, 2017. The applicant has sought advance ruling in respect of the following question:
Whether the applicant is liable to pay tax for supply of services by another person through the e-commerce platform operated by the applicant?
3. The applicant furnishes some facts relevant to the stated activity:
a. The applicant states that he operates a technology based electronic platform service called “DriveU” which seeks to provide drivers on demand to customers who wish to obtain the services of a driver.
b. The drivers offering their services on the DriveU platform are individuals and independent service providers who have opted to enlist themselves with DriveU. The drivers are screened and trained prior to being listed as a driver on the DriveU platform. At no point can the driver represent himself to be an employee of Humble Mobile Solutions Private Limited / DriveU. The user terms and conditions hosted on DriveU website expressly provide that the drivers are independent service providers and are not employees of the applicant.
c. Further, the applicant states that DriveU, in itself does not provide driving or transportation services. The customer offers the mode of transportation. The terms and conditions clearly state that the provision of services by the driver to the customer is, subject to the agreement entered into between them and the applicant shall under no circumstances be party to such agreement. The extract of Para II of the User terms and conditions, as hosted on the applicant’s website, is reproduced by the applicant as the same reads as follows:
“DriveU itself does not provide transportation services. It is upto the User to offer transportation. DriveU only acts as intermediary between the Driver and you. The provision of the Services by the Driver to you is, therefore, subject to the agreement (to be) entered into between the Driver and you. DriveU shall under no circumstance be a party to such agreement. DriveU disclaims any and all liability in respect of the Drivers including any claimes of employment or any vicarious liability arising out of the Service or otherwise.”
4. The applicant elaborates the modus operandi is as follows:
a. DriveU aims at bringing drivers/ operators (service providers) and customers owning private cars on a common platform by which the said customers can place a request for the services of a professional driver for commute.
b. The e-commerce platform brings the customer into contact with a driver so as to avail the latter’s services, subject to the availability of drivers in or around the customer’s location at the time of registering his request.
c. The request by the customer could be for a point-to-point commute or a round trip, is place by the customer electronically over a mobile based app or through an online website operated by the applicant.
d. Towards the end of the commute, the customers are charged for the services of the driver, which is intimated to them over the app or mail. The services may be paid for by the customers either:
