The move follows a decision from the Karnataka AAR that held that Bengaluru-based direct-to-driver app Namma Yatri was not liable to pay GST. The AAR, in the case of Juspay Technologies that runs the Namma Yatri mobility platform, relied upon the dictionary meaning of the word "through" and held that the mere act of linking service providers with customers through a digital platform did not constitute a supply of service and thus not liable to tax.
Section 9(5) of the Central Goods and Services Tax Act, 2017 specifies that liability of GST on certain services has to be discharged by an electronic commerce operator if the services are supplied 'through" its platform. The Karnataka AAR held that as Namma Yatri was merely connecting the auto driver and passenger and its role ended on such connection, the supply was happening independent of its online application and, accordingly, Section 9(5) did not apply on it.
The same Karnataka authority in the case of Opta Cabs Pvt Ltd had given an opposite ruling. In another recent ruling, the Tamil Nadu Advance Ruling Authority, in the case of Balat Enterprises Pvt Ltd, held that the applicant that provides a platform for small business owners to connect with customers was liable to discharge tax liability under Section 9(5) on the specified services. Other players now want clarity on use of the word "through" under Section 9/5 of the CGST law and levy of tax on their services.
Industry experts say many electronic commerce operators or online aggregators have shifted some of their business to a "software as a service model" and contend that they are business-to-business service providers and their customers were auto drivers who were not charged any commission and not liable to GST.
An Uber spokesperson confirmed that the company had filed an application for an advance ruling in Karnataka, seeking clarity on GST law. Cab-hailing platforms Ola and Rapido did not respond to queries from ET. Namma Yatri also did not respond to ET's queries. Uber has also submitted representations to the finance ministry and Karnataka GST authorities requesting clarification and resolution of the tax disparity, the spokesperson said. "Contrary advance rulings have created uncertainty in the industry. We are seeking clarity on the tax position to ensure there is a level playing field and consistent tax application across all industry players," the spokesperson said.
According to tax experts, conflicting rulings had created ambiguity and there was a need to provide clarity.
"The liability to pay GST which has been placed on ecommerce operators for passenger transportation service has recently become ambiguous given conflicting advance rulings in various states; the GST council needs to clarify urgently to prevent market for such services getting impacted and unnecessary litigation being created," said Bipin Sapra, partner, EY.
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