GST
TRT-2025-
New Delhi High Court
Date:-12-04-23
In:-
Issue Favourable to Tax Payer ?:-
Order Date – 12 April 2023
Parties: Uber India Systems Private Limited Vs Union of India & Anr, Pragathisheel Auto Rikshaw Driver Union Vs Union of India & Anr and Ibibo Group Private Limited & Anr Vs Union of India & Ors
Facts –
- The Petitioners Uber India Systems Private Limited, Pragathisheel Auto Rikshaw Driver Union, and Ibibo Group Private Limited, being aggrieved by the amendment in Notification No. 11/2017 dated 28.06.2017 and Notification No.12/2017-Central Tax (Rate) dated 28.06.2017, which withdraw the exemption to the Electronic Commerce Operators (‘ECOs’) with effect from 01.01.2022, with respect to a booking made by a consumer through the electronic platform of an ECO for an auto-rickshaw ride or a bus ride, the ‘fare’ has become exigible to tax.
- It was contended by the petitioners that the amendment is ultra vires to the Constitution of India and Section 9(5) and 11 of Central Goods and Service Tax Act, 2017.
Issue –
- Whether the amendments are ultra-virus to the constitution of India and Section 9(5) and 11 of Central Goods and Service Tax Act, 2017?
Order –
- The Divisional Bench of Hon’ble High court observed that in view of the statutory recognition in the Act of 2017 that the ECOs are a distinct category, the submission of the Petitioner 1 and 3 that an ECO is necessary entitled to all the exemptions, which are available to an individual service provider is incorrect. Hence, it was held that the impugned Notifications are not ultra vires to Sections 9(5) of the Act of 2017.
- The distinguishing fact would equally apply to auto-rickshaw drivers who are street hailed. It is an admitted fact that ECO charges commission to the auto-rickshaw drivers for providing the digital platform to get connected with the potential consumer, which is in addition to the conveyance charges the ECO collects from the consumers. The auto rickshaw driver who is street hailed does not have to pay this commission to the ECO. The exemption from GST available to a street hailed auto rickshaw driver therefore provides the individual auto rickshaw driver the capacity to economically compete with the services provided by the ECO and have an option to operate independently.
- The consumer while opting to avail the services of ECO, is also opting for add on services like security, digital payment etc., and therefore, the ECO itself steps into the shoes of the supplier and is not acting as an agent of the supplier.
- Therefore, for all purposes, the ECOs are an independent supplier of service to the consumer and the service provided by the individual supplier is only one facet of the bundle of services assured by the ECOs to the consumer booking through it. Hence, the impugned Notifications do not result in discrimination on the basis of the mode of booking.
- This Court is of the opinion that if Respondents have decided to withdraw the exemption from this distinct category of consumer who opts to use the ECO for making bookings, the same is well within their legislative purview as held by the Supreme Court in State of Rajasthan and Another v. J.K Udaipur Udyog Ltd. And Another, (2004) 7 SCC 673.
- It was further held that the distinction drawn by the Respondents with respect to the nature of the services between entries ‘a’ to ‘d’ on one hand, and entry ‘e’ on the other sufficiently justifies the reasons which weighed with the Respondents for withdrawing the exemption.
- Hence it was held that the Clauses (iii) and (iv) of Notification No. 16/2021- Central Tax (Rate) and Clauses 1(i) and 2(i) of Notification No. 17/2021- Central Tax (Rate), both dated 18.11.2021 are not violative of Articles 14, 19(1)(g) and 21 of the Constitution.
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