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Issues: (i) Whether the self-drive car rental service falls under chapter 99, heading 9973 and service code 997311, and whether it is a transfer of right to use goods or leasing or rental services without operator; (ii) Whether the applicable GST rate is the rate prescribed under Sl. No. 17(viii) of Notification No. 11/2017-Central Tax (Rate) as amended.
Issue (i): Whether the self-drive car rental service falls under chapter 99, heading 9973 and service code 997311, and whether it is a transfer of right to use goods or leasing or rental services without operator.
Analysis: The service was held to be rental of vehicles without operator. After the amendment by Notification No. 20/2019-Central Tax (Rate), SAC 9966 covered only rental services of transport vehicles with operator, leaving the applicant's service within heading 9973. The transfer of right to use requires fulfilment of the settled tests for transfer of effective control and exclusive legal right to use. On the facts, only physical possession was handed over, while control, insurance, repairs, permissions, and legal responsibility remained with the applicant. The transaction therefore amounted to a licence or rental arrangement and not a transfer of right to use goods.
Conclusion: The service falls under heading 9973 and service code 997311, and it is leasing or rental services without operator, not a transfer of right to use goods.
Issue (ii): Whether the applicable GST rate is the rate prescribed under Sl. No. 17(viii) of Notification No. 11/2017-Central Tax (Rate) as amended.
Analysis: Once the service was classified as leasing or rental services without operator, it was held to fall outside the transfer of right to use category under Sl. No. 17(iii) and within the residuary rental entry under Sl. No. 17(viii). That entry prescribes GST at 18%.
Conclusion: The rate under Sl. No. 17(viii) of Notification No. 11/2017-Central Tax (Rate), as amended, is applicable and the GST rate is 18%.
Final Conclusion: The advance ruling answers both questions in the applicant's favour by classifying the activity as self-drive rental service under heading 9973 and by applying the 18% GST rate under the relevant rental entry.
Ratio Decidendi: A self-drive vehicle rental arrangement is not a transfer of right to use goods unless the transferee receives effective control and exclusive legal possession; where control, operational responsibility, and legal incidents remain with the owner, the supply is leasing or rental service without operator.
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