School Bus Service Not Exempt from GST under Notification 12/2017-Central Tax

The Authority for Advance Ruling held that the service provided by M/s. Pooja Vaishnavi School Bus Services does not qualify for exemption under Notification No. 12/2017-Central Tax (Rate) as it constitutes "rent a cab" service. Consequently, the service is subject to GST at specified rates depending on the availability of input tax credit.

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Issues Involved:
1. Applicability of a notification issued under the provisions of this Act.
2. Determination of the liability to pay tax on any goods or services or both.

Issue-wise Detailed Analysis:

Issue 1: Applicability of a notification issued under the provisions of this Act

The applicant, M/s. Pooja Vaishnavi School Bus Services, sought an advance ruling on whether their service of supplying non-air-conditioned buses for transporting staff under a contract carriage is exempt from GST under Notification No. 12/2017-Central Tax (Rate) dated 28-06-2017. The applicant contended that their service falls under the exemption specified in S.No. 15 (b) of the notification, which exempts "Transport of passengers, with or without accompanied belongings, by non-air conditioned contract carriage other than radio taxi, for transportation of passengers, excluding tourism, conducted tour, charter or hire."

The applicant argued that their service meets the criteria of a contract carriage as defined in Section 2(7) of the Motor Vehicles Act, 1988, and thus should be exempt from GST.

However, the concerned officer contended that the service provided by the applicant is not exempt under the said notification. The officer argued that the service provided is "rent a cab" service, which attracts GST. The officer referred to a similar case where the Rajasthan Authority for Advance Ruling concluded that the service of supplying non-air-conditioned vehicles on hire does not qualify for exemption under the notification.

Upon reviewing the facts, the Authority for Advance Ruling (AAR) observed that the applicant's service involves supplying buses on hire to Ratan India Power Limited (RIPL) for transporting their staff. The buses are operated strictly as per RIPL's instructions, indicating a transfer of the right to use the buses by way of effective control. Consequently, the AAR concluded that the service provided by the applicant amounts to "renting of motor vehicle" rather than "transportation of passengers."

The AAR held that the provisions of Notification No. 12/2017-Central Tax (Rate) dated 28-06-2017 are not applicable in this case. The service provided by the applicant is not exempt under the said notification as it falls under the category of "rent a cab" service.

Issue 2: Determination of the liability to pay tax on any goods or services or both

The AAR further analyzed the GST liability on the service provided by the applicant. As the service is classified as "rent a cab" service, it attracts GST. The applicable GST rates are as follows:

- IGST @ 5% (CGST @ 2.5% and SGST @ 2.5%) provided that the credit of input tax charged on goods and services used in supplying the service, other than the input tax credit of input service in the same line of business, has not been taken.
- IGST @ 12% (CGST @ 6% and SGST @ 6%) if input tax credit is availed.

The AAR concluded that the impugned service provided by the applicant is "rent a cab" service and attracts the aforementioned GST rates based on the conditions of input tax credit.

Conclusion:

The Authority for Advance Ruling concluded that the service provided by the applicant does not fall under the exemption specified in Notification No. 12/2017-Central Tax (Rate) dated 28-06-2017. The service is classified as "rent a cab" service and attracts GST at the applicable rates based on the conditions of input tax credit.

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