Taxability of GST on supply, operation, and maintenance services for air-conditioned electric buses

The services provided by the applicant to NMMT involving the supply, operation, and maintenance of air-conditioned electrically operated buses are taxable under GST. The appropriate SAC is Tariff Heading 9966 with a GST rate of 12% with input tax credit (ITC) or 5% without ITC. The applicant is eligible for ITC on input supplies if they pay tax at 12% on the output service. The Authority affirmed the taxability of the services, classified them under SAC 9966, and specified GST rates of 12% with ITC or 5% without ITC.

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Issues Involved:
1. Taxability of services provided by the applicant to NMMT under the Agreement.
2. Appropriate SAC (Services Accounting Code) and applicable GST rate for the services.
3. Eligibility of the applicant to avail input tax credit on procurement of input supplies.

Detailed Analysis:

Issue 1: Taxability of Services Provided
The primary question was whether the services rendered by the applicant to NMMT, involving the supply, operation, and maintenance of air-conditioned electrically operated buses, are taxable under GST. The Authority confirmed that these services are taxable. The services provided by the applicant constitute a supply as defined under Section 7 of the CGST Act and are taxable under GST. The applicant transfers the buses (along with necessary personnel) to NMMT for a consideration, qualifying as a supply of service under entry 5(f) of Schedule II of the CGST Act. The services are akin to those described under Entry No. 10(i) of Notification No. 11/2017-C.T.(R), which pertains to "Renting of any motor vehicle designed to carry passengers where the cost of fuel is included in the consideration charged from the service recipient."

Issue 2: Appropriate SAC and GST Rate
The appropriate SAC for the services provided by the applicant is Tariff Heading 9966, which pertains to "Rental services of transport vehicles with operators." The GST rate applicable is 12% if the applicant opts to avail input tax credit (ITC) or 5% if they do not avail ITC. The Authority noted that the consideration charged by the applicant includes the cost of lithium-ion batteries (used as fuel), thus meeting the condition for Entry 10(i) of the Rate Notification. If the services do not fall under Entry 10(i), they would be covered under the residual Entry 10(iii) and taxable at 18%.

Issue 3: Eligibility to Avail Input Tax Credit
The applicant is eligible to avail ITC on the procurement of input supplies used in supplying services to NMMT if they opt to pay tax at the rate of 12% under Entry 10(i). If the tax is payable under Entry 10(iii) at the rate of 18%, the applicant is also eligible to avail ITC as there is no restriction under this entry. The Authority emphasized that the services are taxable, and the provisions of Notification No. 12/2017-CT (R) are not applicable. The activity amounts to 'renting of motor vehicle' and qualifies as a taxable activity under GST laws.

Conclusion:
1. The services provided by the applicant are taxable under GST.
2. The appropriate SAC for the services is Tariff Heading 9966, with a GST rate of 12% (with ITC) or 5% (without ITC).
3. The applicant is eligible to avail ITC on input supplies if they pay tax at 12% on output service.

Order:
The Authority ruled affirmatively on the taxability of the services, classified the services under SAC 9966, and specified the GST rates as 12% with ITC or 5% without ITC. The applicant is eligible for ITC if they opt for the 12% GST rate.

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