The Central Board of Indirect Taxes & Customs ( CBIC ) granted app-based ride-hailing companies a week to submit their written perspectives on the applicability of GST for rides booked through their platforms.
During the discussion, Uber’s representatives highlighted inconsistencies in tax applicability, while Namma Yatri explained its distinct business model.
Complete Supreme Court Judgment on GST from 2017 to 2024 with Free E-Book Access, Click here
Sources familiar with the CBIC meeting indicated that Uber India clarified there are two business models in play, both aimed at providing transportation services. They noted that Uber utilises an algorithm-based pricing model similar to that of airlines, where fares fluctuate based on demand and comply with local regulations in different states. They argued that taxation should also be consistent, irrespective of the business model.
Rapido explained it operates under three different models: a traditional algorithm-based fare structure, a base fare set by the relevant state RTO, and a model where drivers directly collect fares from customers. They contended that for the third model, as they do not control or have knowledge of the fares collected by drivers, they cannot be expected to collect GST.
Complete Supreme Court Judgment on GST from 2017 to 2024 with Free E-Book Access, Click here
Namma Yatri, which operates on an ONDC platform, stated it does not control the rides since its app’s function is solely to connect drivers and users. It neither sets fares nor manages their collection; instead, it charges a fee to its technology service subscribers (drivers) and pays GST on that fee. The company asserted it could not collect GST on rides as they do not constitute its supply under GST laws. They also claimed that Section 9(5) of the CGST Act, 2017, does not apply to them as they are not an e-commerce operator.
After considering these various viewpoints, the CBIC Chairman indicated that the taxation of e-commerce businesses under Section 9(5) hinges on the interpretation of the word “through.” He requested that each company submit their individual viewpoints, promising to review them before issuing any clarifications.
Complete Supreme Court Judgment on GST from 2017 to 2024 with Free E-Book Access, Click here
The apex indirect taxes board has initiated efforts to address the discrepancies regarding GST applicability for rides booked via e-commerce apps, following Uber India’s concerns about inconsistencies and the need for a level playing field.
This meeting was held in response to a Karnataka High Court direction on September 25, instructing the CBIC to consider Uber India’s concerns after hearing from all stakeholders within six weeks. Justice SR Krishna Kumar of the Karnataka High Court has scheduled further hearings for Uber’s petition on November 12.
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