The Karnataka High Court on Friday has issued a significant ruling, granting interim relief to app-based mobility operators like Uber regarding their Goods and Services Tax liability. The court instructed the Central Board of Indirect Tax & Customs to engage with stakeholders and provide clarity on taxability within six weeks.
This decision follows Uber's writ petition seeking clarification on tax liability after the Advance Ruling Authority issued conflicting rulings on services offered by such operators. Recently, Karnataka AAR determined that Namma Yatri, a Bengaluru-based mobility platform, was exempt from paying GST for merely facilitating connections between service providers and customers through its app.
According to AAR, this action does not constitute a supply of service, thereby excluding it from GST liability.
However, Central GST regulations specify that e-commerce operators, including mobility operators, are responsible for GST on certain services provided through their platforms. AAR held that mobility operators only connect drivers and passengers, which doesn't constitute a supply of service. Yet, in the Opta Cabs case, AAR gave an opposing ruling, deeming them liable for tax liability.
The intervention by Karnataka High Court may result in clearer guidelines on GST applicability, thereby ensuring consistent tax treatment for digital platforms throughout the private hire industry, AKM Global's Sandeep Sehgal said. "A standardised tax framework will reduce compliance hurdles and create consistency across industries that operate through online platforms."
The court has directed that the matter be tagged with Rapido's pending writ petition and listed for hearing on Nov. 12.
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