Bus hiring exemption applies where transport undertakings receive vehicles with drivers, fuel, operation and maintenance under the GST notification.
Supply of buses with drivers, fuel, operation and maintenance on a kilometre-based consideration was treated as giving buses on hire, and the phrase "giving on hire" in the exemption entry was read broadly to include renting of vehicles. The recipient companies were treated as state transport undertakings because they were owned or controlled by the State Government, bringing the supply within Entry 22 of Notification No. 12/2017-Central Tax (Rate). The service was therefore exempt from GST, and the questions of tax rate and input tax credit did not survive for separate determination.
Issues: Whether the applicant's supply of buses on hire to the specified city transport companies was exempt under Entry 22 of Notification No. 12/2017-Central Tax (Rate), and, if so, whether the questions of tax rate and input tax credit survived for determination.
Analysis: The supply under the agreements was found to be the provision of buses with drivers, fuel, operation and maintenance for consideration computed on effective kilometres, which in substance amounted to giving the vehicle on hire. The recipient entities were treated as state transport undertakings because they were companies owned or controlled by State Government, bringing them within the meaning of Section 2(42) of the Motor Vehicles Act, 1988 as adopted in the exemption notification. The expression "giving on hire" in Entry 22 was applied in the broader sense clarified by Circular No. 164/20/2021-GST dated 06.10.2021, which states that renting of vehicles is included within that expression. On this basis, the service was held to fall within the exemption. Once the supply was exempt, the questions relating to rate of tax and input tax credit did not require separate adjudication.
Conclusion: The applicant's supply was held to be exempt from GST under Entry 22 of Notification No. 12/2017-Central Tax (Rate), and the remaining questions on tax rate and input tax credit became redundant.
Final Conclusion: The ruling granted complete exemption treatment for the impugned bus-hiring service supplied to the identified state transport undertakings.
Ratio Decidendi: Where a service of providing buses on hire is supplied to an entity falling within the statutory meaning of a state transport undertaking, the expression "giving on hire" in the exemption notification includes such renting or hiring arrangement and the supply is exempt from GST.
TaxTMI 
AI Drafter ✕
TaxTMI 
