The Gujarat Authority for Advance Ruling (AAR) has held that DSoft Innovations LLP, the company behind the Freedeem App, qualifies as an electronic commerce operator under the Goods and Services Tax (GST) Act. The order brings clarity on tax obligations related to discount platforms, vouchers, and merchant-aggregator services.
The bench of Vishal Malani and Sushma Vora has observed that Freedeem, by collecting customer payments on behalf of merchants through its app, falls squarely under the definition of an electronic commerce operator. Under Section 24(x) read with Section 52 of the CGST Act, all e-commerce operators must mandatorily register under GST, irrespective of turnover. This registration is separate from regular supplier GSTIN.
The applicant, DSoft Innovations operates the Freedeem App, a platform that connects local merchants—including bakeries, salons, beauty parlors, hotels, and restaurants—with customers by offering deals and discount vouchers. The app enables users to either Pay Bill – settle merchant invoices via the app after availing the service, or Buy Now – purchase vouchers directly through the platform.
The company earns through success-based commissions from merchants, with payments routed via the app. Currently, Freedeem operates in Ahmedabad, Gandhinagar, Mehsana, Surat, Vadodara, and Kolkata, with plans for expansion.
The applicant sought clarity on five major points:
- Whether Freedeem qualifies as an e-commerce operator and requires separate GST registration.
- Whether it must discharge tax under reverse charge mechanism (RCM) for restaurant services under Section 9(5) of the GST Act.
- Whether it must deduct Tax Collected at Source (TCS) while making payments to merchants.
- Whether exemption from RCM alters TCS applicability.
- Whether state-wise GST registration is compulsory for TCS collection.
The AAR clarified that Freedeem does not fall under the categories notified for RCM liability, which mainly include passenger transport, hotel accommodation, housekeeping, and restaurant services. Since Freedeem only facilitates offers/vouchers and does not provide direct restaurant or delivery services, it is outside the ambit of Section 9(5).
Despite not being liable under RCM, Freedeem must collect TCS at 1% on net taxable supplies routed through its platform, in line with Section 52.
The AAR confirmed that Freedeem must obtain separate GST registrations in each state where merchants operate, even if it follows a centralized management system. For inter-state supplies, TCS at 1% IGST applies, while intra-state supplies attract 0.5% CGST and 0.5% SGST.
Ruling Details
Applicant’s Name: DSoft Innovations
Ruling Date: 12/08/2025
