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CA Final · Indirect Tax Laws · Electronic Commerce Transactions

Zephyr Cabs Pvt Ltd operates an app through which independent drivers supply local passenger transport services. The Government has notified, under section 9(5) of the CGST Act, 2017, that tax on such intra-State services supplied through an electronic commerce operator is to be paid by the operator. Who is liable to pay the GST on a ride supplied through the app within the same State?

The electronic commerce operator pays the tax. Under section 9(5), where the Government notifies a category of intra-State services supplied through an operator, the operator is treated as the supplier liable for paying the tax, so neither the driver nor the passenger pays it.

  1. AThe driver supplying the ride, as the supplier of the service
  2. BThe passenger, under reverse charge as the recipient
  3. CThe electronic commerce operator, as if it were the supplier liable for paying the taxCorrect
  4. DNeither, because transport through an app is outside GST

Explanation

Section 9(5) lets the Government notify categories of services on which intra-State 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. The driver and passenger are therefore not the persons liable, and the passenger's liability under reverse charge arises only under section 9(3) or 9(4) notifications, which are not in point here.

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