2020 (7) TMI 410 - AAR - GST

Ruling on GST rates for public sector services: Contract carriage vs. rental services under Notifications 11/2017 & 12/2017.

The ruling determined that the services provided by the applicant, a public sector undertaking, did not qualify as contract carriage under Notification ... Non-airconditioned contract carriage exemption - definition of contract carriage under Section 2(7) of the Motor Vehicles Act, 1988 - rental services of transport vehicles taxable under notification no.11/2017 - conditional GST rate (reduced rate where fuel cost included and input tax credit not availed) - scope of advance ruling under Section 97(2) of the GST ActNon-airconditioned contract carriage exemption - definition of contract carriage under Section 2(7) of the Motor Vehicles Act, 1988 - rental services of transport vehicles taxable under notification no.11/2017 - Whether the applicant's supply of non-airconditioned buses on contract qualifies as exempt non-airconditioned contract carriage under serial no.15 of notification no.12/2017 or is taxable as rental services under serial no.10 of notification no.11/2017. - HELD THAT: - The Authority examined the text of serial no.15 of notification no.12/2017 which exempts transport by non-airconditioned contract carriage (excluding tourism, conducted tour, charter or hire). It applied the definition of 'contract carriage' in Section 2(7) of the Motor Vehicles Act, 1988, which contemplates a vehicle engaged as a whole under a contract for hire or reward without picking up or setting down passengers not included in the contract. The factual matrix disclosed that the applicant rents non-airconditioned buses for occasions (marriages, functions), transport of employees and students of other organisations, pilgrimage and public meetings, and similar services. On applying the statutory definition and the terms of the exemption, the Authority concluded that the applicant's activities fall within 'rental services of transport vehicles' rather than the contract carriage exemption under serial no.15. Consequently, the supply is governed by serial no.10 of notification no.11/2017 and attracts GST under the rates and conditions specified therein. [Paras 6]The applicant's bus-hiring services do not qualify for the non-airconditioned contract carriage exemption and are taxable as rental services of transport vehicles under notification no.11/2017.Conditional GST rate (reduced rate where fuel cost included and input tax credit not availed) - rental services of transport vehicles taxable under notification no.11/2017 - What rate of GST applies to the applicant's rental services of transport vehicles. - HELD THAT: - The Authority referred to serial no.10 of notification no.11/2017 as amended, which prescribes GST rates for rental services of transport vehicles. It noted the reduced effective rate (5% comprising CGST+SGST) applies only where the consideration charged includes fuel cost and the supplier has not availed input tax credit on inputs used exclusively or has reversed attributable input tax credit as explained in the notification. If these conditions are not satisfied, the standard rate of 18% (9% CGST + 9% SGST) applies. The Authority applied these legal propositions to the classification reached and stated the tax liability accordingly, leaving factual determination of the conditions to be verified by the applicant for applicability of the reduced rate. [Paras 6]The rental services attract GST under notification no.11/2017; the reduced rate is available only subject to the specified conditions (fuel included in consideration and no input tax credit claimed or appropriate reversal), otherwise the rate is 18%.Scope of advance ruling under Section 97(2) of the GST Act - Whether the question on applicability of filing FORM GSTR-9C by the applicant falls within matters on which an advance ruling can be sought under Section 97(2). - HELD THAT: - The Authority reproduced the enumerated matters in Section 97(2) (classification, applicability of notifications, time and value of supply, admissibility of input tax credit, liability to pay tax, requirement to be registered, and whether an activity amounts to supply). It observed that the applicant's query on the requirement to file reconciliation statement in FORM GSTR-9C does not fall within any of these specified categories. Accordingly, the Authority held that it could not answer the question by way of an advance ruling under the statutory scope. [Paras 6]The question on whether the applicant is required to file FORM GSTR-9C is outside the scope of advance ruling under Section 97(2) and cannot be answered in this application.Final Conclusion: The Authority ruled that the applicant's bus-hire activities are taxable as rental services of transport vehicles under notification no.11/2017 (not exempt as non-airconditioned contract carriage under notification no.12/2017); the reduced rate subject to conditions (fuel included and no input tax credit) may apply, otherwise 18% is leviable; and the question on filing FORM GSTR-9C is not within the scope of advance ruling under Section 97(2). Issues:1. Determination of whether services provided by the applicant fall under contract carriage as per Notification 12/2017 and the applicable tax rate.2. Requirement for the applicant, a public sector undertaking, to file a reconciliation statement in FORM GSTR-9C.Analysis:Issue 1: Services Classification and Tax RateThe applicant, a public sector undertaking engaged in passenger and goods transportation, sought an advance ruling on whether providing non-air conditioned buses on contract falls under contract carriage as per Notification 12/2017. The Authority examined the definition of contract carriage under the Motor Vehicles Act, 1988, and the relevant GST notifications. It was concluded that the services offered did not qualify as contract carriage under Notification 12/2017 but were categorized as rental services under Serial No. 10 of Notification 11/2017. The applicable GST rate for rental services, subject to conditions, was determined to be 5% or 12%, while non-compliance with conditions would attract an 18% GST rate.Issue 2: Requirement for FORM GSTR-9CThe applicant inquired about the necessity to file a reconciliation statement in FORM GSTR-9C as a public sector undertaking. The Authority highlighted that the question did not fall under the specified categories for seeking an advance ruling as per Section 97(2) of the Act. Therefore, the applicability of FORM GSTR-9C was not within the scope of the advance ruling.In the ruling, the Authority clarified that the applicant's services were classified as rental services, subject to the prescribed GST rates and conditions. Additionally, it was emphasized that the question regarding the requirement to file FORM GSTR-9C did not align with the advance ruling scope. The ruling provided detailed explanations based on legal provisions and notifications to address the issues raised by the applicant, ensuring clarity on the tax implications and compliance obligations.