Sale Of Internet Advertising Space Except On Commission Is Exigible To 18% GST: AAR

The applicant, Myntra Designs Private Limited, owns an e-commerce portal, www.myntra.com, and is a major Indian fashion e-commerce company. The applicant is engaged in the business of selling fashion and lifestyle products through the said e-commerce portal.

The suppliers of fashion and lifestyle products intending to sell their products through the applicant's portal list their products on the applicant's portal and sell them to the customers who place their order using the applicant's portal. Once an order is placed by the customer, the applicant collects the money from them towards the purchase of the order through its portal, in its capacity as an e-commerce portal operator, and settles the amount payable with the supplier of the order within a specified period.

As per the agreement, it was mutually agreed upon by the applicant and Lenzing Singapore Pte Limited that advertisement material in the form of impressions will be provided to the applicant by Lenzing for placement on the e-commerce portal website and mobile application.

The applicant has sought an advance ruling in respect of the correct classification of the services provided and the rate of tax on the transaction of the applicant providing space on its web portal for advertisements provided by a foreign entity, i.e., Lenzing Singapore Pte Limited.

The AAR held that the services provided by the applicant to M/s Lenzing are those of rendering "Sale of internet advertising space (except on commission)" and charging a fixed rate and not a commission for providing such space. Hence, the same is classified under six-digit SAC 998365 under the heading 9983, which reads "Other professional, technical, and business services".

Applicant's Name: Myntra Designs Private Limited

Citation: Advance Ruling No. KAR ADRG 19/2022

Dated: 01.07.2022

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