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CA Final · Indirect Tax Laws · Electronic Commerce Transactions

Zenith Travels Pvt Ltd, a Pune-based registered company, runs a mobile app on which independent taxi operators offer rides. The Government has notified local passenger transport services supplied through an electronic commerce operator as a category on which the operator pays tax under section 9(5) of the CGST Act. Zenith has no physical presence issue, and a taxi operator supplies an intra-State ride booked through the app. Who is liable to pay GST on this ride?

Zenith Travels, the electronic commerce operator, is liable to pay the GST. Under section 9(5), for notified categories of services supplied through it, the operator is treated as if it were the supplier liable to pay the tax, so the taxi operator does not pay on that ride.

  1. AThe taxi operator, as the supplier, under forward charge
  2. BThe passenger, under reverse charge
  3. CZenith Travels, as if it were the supplier liable to pay the taxCorrect
  4. DBoth the taxi operator and Zenith, in equal shares

Explanation

Section 9(5) lets the Government notify categories of services on which tax is paid by the electronic commerce operator if the services are supplied through it. All provisions of the Act then apply to the operator as if it were the supplier liable to pay tax. Option B is wrong because the liability is not placed on the recipient under reverse charge, and the tax is not split between the two.

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