GST on ride-hailing: Karnataka AAR says may recall ruling on Namma Yatri
Karnataka's Authority for Advance Ruling (AAR) has informed Juspay Technologies that it might reverse an earlier ruling that said the Softbank-funded startup’s Namma Yatri cab-hailing service was not liable to collect GST on auto-rickshaw rides booked on the platform.
This comes after Bengaluru-based Juspay hived off the cab-hailing business to a subsidiary, Moving Tech Innovations.
The AAR, a statutory body that provides clarity on the applicability of GST, ruled on September 15, 2023, that Namma Yatri was not liable to collect GST on auto-rickshaw fares because it followed a software-as-a-service (SaaS) model. Under this model, the platform collects a fixed subscription fee from auto-rickshaw drivers for using its services, and not a per-ride commission. Cab-hailing platforms like Ola and Uber collect a 5% GST on the fares.
In its latest notice dated June 19, the AAR said it gathered from Moving Tech’s application that the company acquired Namma Yatri as a “going concern.” The authority said it could declare the September 2023 ruling void because Juspay had obtained it by suppressing/misrepresenting material facts. Also, the earlier ruling was binding only on the applicant who had sought it (Juspay, which no longer owns Namma Yatri) and the concerned jurisdictional GST officials, it said.
The notice, which ET has seen, has fixed a hearing on June 27, Friday, for Juspay and Moving Tech to appear and counter the AAR’s assessment if they want to do so.
A GST official in Karnataka confirmed sending the notice. Juspay and Namma Yatri did not respond to emails seeking comment.
A couple of GST practitioners viewed the AAR move as rare, probably unprecedented.
HD Arun Kumar, a former additional commissioner of commercial taxes with the experience of chairing the AAR, told ET that the AAR lacks the authority to recall its own order, but such reversals can happen either on appeal or on a review by higher authorities.
