CBIC to Discuss GST Applicability on Ride-Booking Platforms Amid Conflicting Rulings

The Central Bureau of Indirect Taxes and Customs (CBIC) is all set to meet today in Delhi. This is with regard to addressing differences that pop up when it comes to the applicability of Goods and Services Tax (GST) on rides that are booked via e-commerce platforms. 

This is as per an Economic Times report. The issue started after concerns were raised by ride-hailing app Uber India about lack of uniformity about charging GST. Earlier, the ride hailing platform asked for more clarity after conflicting rulings from different Advance Ruling Authorities (AARs).

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The issue arose after the Karnataka AAR ruled that ride-hailing platform Namma Yatri does not have to pay GST. The ruling indicated that since the work of Namma Yatri ends with connecting the driver with the passenger, it was not liable to pay GST. This was because the supply of the service was not related to the online application. Interestingly, this comes at a time when an opposite ruling was given by the Karnataka authority with regards to Opta Cabs Pvt Ltd.

Meanwhile, the Karnataka AAR also highlighted in its ruling that Rapido is liable to pay GST. The ruling said, "The applicant (Roppen Transportation), is liable to pay GST on the supply of services provided by the independent four-wheeler cab service provider to his passengers on the applicant’s app platform, being an e-commerce operator, in terms of Section 9(5) of the CGST Act 2017".

Speaking to the Economic Times, Bipin Sapra, partner at EY, said, "The liability to pay GST that 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 the market for such services from getting impacted and unnecessary litigation being created.” 

The meeting that will be held today will be chaired by the CBIC chairman. In an email to ride hailing platforms, the CBIC indicated that the meeting would be conducted under Section 9(5) of the CGST Act. Section 9 of the CGST Act deals with levy and collection of GST. It says, “As per Section 9(5) of the CGST Act, Electronic Commerce Operator (ECO) is required to pay tax on supply of services such as passenger transport service, accommodation services, housekeeping services, and restaurant services if such services are supplied through ECO." 

Further, the meeting will also reportedly gather input from various stakeholders for the consideration of amendments or/and clarifications if needed in the law and procedures under the GST.