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CA Final · Indirect Tax Laws · Electronic Commerce Transactions

Gharana Rides Pvt Ltd operates a mobile app through which independent drivers supply local passenger transport services. Assume the Government has notified passenger transport services supplied through an electronic commerce operator under section 9(5) of the CGST Act. Who is liable to pay the central tax on an intra-State ride supplied through the app?

Gharana Rides Pvt Ltd, the electronic commerce operator, is liable to pay the tax. Under section 9(5), for notified categories of services supplied through the operator, the operator is treated as the supplier liable for paying tax, so neither the driver nor the passenger pays it.

  1. AThe driver who provides the ride, as the supplier
  2. BThe passenger, under reverse charge under section 9(3)
  3. CGharana Rides Pvt Ltd, as if it were the supplier liable for paying the taxCorrect
  4. DThe Government, since the supply is notified

Explanation

Section 9(5) lets the Government notify categories of services on which tax is paid by the electronic commerce operator when supplied through it, and all provisions of the Act apply to the operator as if it were the supplier liable to pay tax. The driver is not the person liable for that notified service. Reverse charge under section 9(3) places liability on the recipient, which is a different mechanism and is wrong here.

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