Classification of e-bike and bicycle rental services under SAC 9966 with 18% GST rate upheld

The Authority determined that the services provided by the applicant, involving the rental of e-bikes and bicycles, are classified under SAC 9966 - Rental services of transport vehicles with or without operators. The GST rate applicable to these services remains at 18%, as the reclassification under SAC 9973 was deemed inapplicable. The Authority clarified that the 2019 amendment to the rate notification did not alter the classification criteria but only affected the rate of GST for specific services.

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Issues Involved:
1. Classification of services provided by the applicant.
2. Appropriate rate of GST applicable to the services provided.
3. Interpretation of the amendment to the rate notification under Notification No. 20/2019-CT(R) dated 30.09.2019.

Issue-wise Detailed Analysis:

1. Classification of Services Provided by the Applicant:
The applicant, engaged in renting e-bikes (Miracle) and bicycles (Move) in Bengaluru, sought clarification on whether their services fall under SAC 9973 - Leasing or rental services without operator. The applicant argued that their services should be reclassified under SAC 9973 due to an amendment effective from 01st October 2019, which distinguishes between rental services with and without operators. However, the Authority clarified that the classification of services did not change with the amendment; only the rate of tax was affected. The services provided by the applicant, involving the rental of transport vehicles, are thus classified under SAC 9966 - Rental services of transport vehicles with or without operators.

2. Appropriate Rate of GST Applicable to the Services Provided:
The applicant was charging GST at 18% under HSN 9966 for their rental services. They argued that post-amendment, the rate of tax should align with the rates applicable to the goods being rented. For e-bikes (Miracle), they proposed a rate of 5%, and for bicycles (Move), a rate of 12%. The Authority, however, concluded that the applicant's services are correctly classified under SAC 9966, and the rate of GST applicable remains 18%, as the classification under SAC 9973 was not applicable.

3. Interpretation of the Amendment to the Rate Notification:
The applicant interpreted the amendment under Notification No. 20/2019-CT(R) dated 30.09.2019 as a change in the classification of their services. The Authority clarified that the amendment pertained only to the rate of GST for services under SAC 9973 and did not alter the classification criteria. The amendment was intended to provide clarity on the GST rates for leasing or rental services without operators but did not impact the classification of transport vehicle rental services under SAC 9966.

Conclusion:
The Authority ruled that renting of e-bikes and bicycles without operators cannot be classified under SAC 9973 and that the amendment to Notification No. 11/2017 CT(R) dated 28th June 2017, as amended, does not apply to the applicant's case. The appropriate classification remains under SAC 9966, with an applicable GST rate of 18%.

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