The meeting, to be chaired by the CBIC chairman, is being held to “identify and address concerns of electronic commerce operators regarding liability under Section 9(5) of the CGST Act and to gather input from various stakeholders for the consideration of amendments or/and clarifications if needed in the law and procedures under the GST”, the CBIC said in an email to ride hailing platforms.
The meeting comes in the wake of a September 25 direction from the Karnataka High Court to the CBIC to decide on Uber India’s representations on the issue after hearing all stakeholders in six weeks.
Justice SR Krishna Kumar, in his order, also asked Karnataka’s Authority on Advance Ruling (AAR) to dispose of Uber’s January 5 application within six weeks. The court, on a request from Uber, said the GST paid by the company is subject to the outcome of its petition. The court will take up the case for further hearing on November 12.
Uber moved the high court early this year, seeking clarity on Section 9(5) of the CGST Act, 2017 and whether ecommerce operators offering passenger transportation services must pay GST under the provision. The company sought the court’s intervention to ensure uniformity in the implementation of the law and level playing field among all operators. It also appealed to the court that the GST paid should be subject to refund along with interest.
Section 9(5) of the CGST law requires app-based ride hailing services to discharge the GST liability arising from rides booked on the platform.
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ET reported on September 19 that ride-hailing platforms have slammed on the brakes on innovation as well as fresh investments for want of a clarity on the GST rates applicable under different business models on taxi and auto-rickshaw rides.Sections of operators were aggrieved that the AAR in Karnataka held divergent views on the applicability of GST on auto-rickshaw rides, while Tamil Nadu’s authority upheld its applicability. “Contrary advance rulings have created uncertainty in the industry,” Uber had said in a September 16 email to ET. “There has to be predictability and consistency in tax administration to ensure a level playing field for all industry players. In a highly competitive environment, inconsistencies in tax application—such as those arising from the use of creative interpretation, can lead to pricing arbitrage advantages, creating further uncertainty.”
The lack of clarity in other states could lead to varying interpretations, according to industry executives.
“The confusion exists in all states,” said an executive, who did not wish to be identified.
The confusion was triggered by Karnataka’s AAR recently ruling that Rapido must pay GST on services provided by taxi drivers using its app, treating the driver’s services as those of Rapido. The ruling came in sharp contrast to an earlier ruling in the case of two operators that they were not liable to pay GST on rides.
