Karnataka AAR: Uber Responsible to Pay GST as E-commerce Operator

Karnataka’s Authority for Advance Ruling (KAAR) mentioned that Uber, as an e-commerce operator, needs to collect and pay the GST on the passenger transportation services furnished via cab drivers via its offered platform.

Also, it mentioned that the can aggregator will be obligated for GST even if its application (APP) merely connects the driver and passenger with the driver providing the service.

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AAR in its ruling dated November 4 ruled that the applicant fulfils the description of an e-commerce operator and the kind of supply as conceptualized in the GST Act. it is the responsibility of the applicant to collect and file GST on the supply of services furnished via the drivers/service provider (person who has subscribed to the online Uber Platform corresponding to the offered business model) to their customers (person who has subscribed to online Uber platform/identified on the Uber’s platform) as per the proposed business model.

Significance for two reasons has been presumed by the same ruling. First, the Karnataka High Court dated September 26 seeks the AAR to dispose of the case in 6 weeks, and as per that the AAR provides its ruling. Second, the HC will take the same case dated November 12. Before that the HC has been furnished with an interim stay on the case.

While Uber and the other ride-booking apps have made the representation to the CBIC towards the GST applicability. It is been anticipated that the case can be discussed in the forthcoming GST council meeting which may be conducted in the subsequent month.

In the hearing, the company claimed that they were not engaged in collecting the consideration for the ride on behalf of the driver. It was marked by AAR that the passenger files the consideration to the driver directly. It is to be cited that neither the descriptions of electronic commerce nor electronic commerce operator u/s the CGST Act 2017 specify that the e-commerce operator needs to collect the consideration.

The contract is between the driver and the passenger and the service is provided via the driver to the passenger therefore the tax filing obligation is on the electronic commerce operator via the way of considering the provision GST act in which it is mentioned that all its provisions will apply to these electronic commerce operator as if he is the supplier obligated to file the tax concerning to the supply of these services.

This service supply is directed to the supply of services for the transportation of passengers by radio taxi, motor cab, maxi cab, and motorcycle, supplied via the electronic commerce operator.

Read Also: Uber and Others Seek Clarification from the Govt on GST Applicability to Its Business

Subsequently, we discover that the applicant is wrapped under the description of the electronic commerce operator and the supply of services via the method of transportation passengers in the offered commission-free monetization model via an auto-rickshaw, radio-taxi, motor-cab, maxi-cab, and the motorcycle is supplied via them, AAR mentioned.