Passenger transport classification applies to employee bus commuting services where routes and schedules are fixed by the client.

Composite bus transportation and maintenance services for employee commutation are classifiable as passenger transport services under SAC 9964, not as rental services of transport vehicles under SAC 9966. The ruling applied the explanatory notes to SAC 9964, which cover local land transport by bus on pre-determined routes and schedules for a defined user segment such as enterprises. It also found that the arrangement was not a rental service because the client fixed the routes, schedules, and operating requirements, while the supplier operated the buses.

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Issues: Whether the applicant's composite bus transportation and maintenance service for employee commutation is classifiable as passenger transport services under SAC 9964 or as rental services of transport vehicles under SAC 9966.

Analysis: The service was examined under Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017. The activity did not answer the description of transport of passengers by contract carriage, stage carriage, radio taxi, or motorcab, since the vehicles were buses and not motorcabs. The explanatory notes to SAC 9964 specifically include local land transport services of passengers by bus, including transportation over pre-determined routes and schedules for a specific segment of users such as enterprises. The arrangement also did not fall under SAC 9966, because in a rental service the renter determines how and when the vehicle is operated, whereas here the client fixed the routes, schedules, and operational requirements while the applicant operated the buses.

Conclusion: The service is classifiable under Heading 9964 as passenger transport services and not under SAC 9966 as rental services of transport vehicles.

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