India Court Ruling: Uber Liable for GST as E-Commerce Operator

Karnataka’s Authority for Advance Ruling (KAAR) issued a ruling regarding Uber's obligations under the Goods and Service (GST) Act in India. The ruling significantly impacts Uber and drivers who offer rides on its app. This ruling comes after the one in which the KAAR ruled that the ride-sharing company Rapido is liable for paying GST on service provided by drivers using its app.

Impact of the Ruling

The KAAR stated that Uber is an e-commerce operator and, as such, must collect and pay GST on the services provided by the drivers using the app. Furthermore, the GST is applicable even if the app only connects drivers and users with the drivers providing services.

Uber stated that this ruling is incorrect and cannot be treated as an e-commerce operator since it does not collect ride fees; that is done by the drivers, who charge that fee directly from customers.

However, the KAAR stated that Uber meets all the criteria to be considered an e-commerce operator and that under the GST Act, it is not required to collect fees to be considered an e-commerce operator. As stated by the KAAR, Uber is the service supplier, and the drivers provide the services to the consumers. Therefore, Uber, as an e-commerce operator and supplier of services, is responsible for collecting and paying GST.

Conclusion

The Rapido and Uber KAAR decisions are of utmost importance as they shift the responsibility for collecting and paying GST to the tech companies behind ride-sharing apps. What Uber will do next to challenge and overturn this decision remains to be seen.

However, following the stated ruling, it is clear that all ride-sharing apps, such as autorickshaws, radio taxis, motor cabs, maxi cabs, and motorcycles that are merely connecting drivers and customers, may be liable for GST, even when they do not collect ride fees.

Source: Businesses Line, The Economic Times, Sag Info Tech - Advance Ruling