Electricity is not fuel for GST rate entry 10(i); electrically operated bus rentals with operators fall under the residual entry instead.

Electricity is not "fuel" for purposes of Notification No. 11/2017-Central Tax (Rate), so rental services of electrically operated buses with operators do not satisfy entry 10(i), which requires fuel cost to be included in the consideration. The Authority applied the notification's ordinary language and noted that electrically operated vehicles are dealt with separately, confirming that electricity cannot be read into the concessional entry by implication. The service therefore falls within the residual entry 10(iii) for rental services of transport vehicles with operators not covered by entries 10(i), 10(ia) or 10(ii), and is taxable under that entry.

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Issues: (i) Whether entry 10(i) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 covers rental services of buses with operators where the buses are electrically operated and the consideration is computed on a per-kilometre basis. (ii) Whether such services fall under entry 10(iii) of the same notification on the footing that electricity is not "fuel" and the cost of fuel is therefore not included in the consideration.

Issue (i): Whether entry 10(i) of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 covers rental services of buses with operators where the buses are electrically operated and the consideration is computed on a per-kilometre basis.

Analysis: Entry 10(i) applies to renting of motor vehicles designed to carry passengers where the cost of fuel is included in the consideration charged. The service in question was found to be rental of buses with operators, but the decisive statutory condition was whether the consideration included fuel cost. The Authority noted that the notification uses the term "fuel" in its ordinary sense and that the legislature separately refers to electrically operated vehicles in another notification, showing that electricity is not treated as fuel for this purpose. Since electricity is a form of energy and not combustible fuel, the condition in entry 10(i) was not satisfied.

Conclusion: The services do not fall under entry 10(i).

Issue (ii): Whether such services fall under entry 10(iii) of the same notification on the footing that electricity is not "fuel" and the cost of fuel is therefore not included in the consideration.

Analysis: Entry 10(iii) is the residual entry for rental services of transport vehicles with operators other than those covered by entries 10(i), 10(ia) and 10(ii). Once electricity was held not to be "fuel", the service could not be brought within entry 10(i). The Authority therefore treated the service as a residual rental service under entry 10(iii) and applied the rate prescribed thereunder. The ruling was reinforced by the principle that a taxing notification must be construed according to its express language and cannot be expanded by implication.

Conclusion: The services fall under entry 10(iii) and are taxable accordingly.

Final Conclusion: The ruling settles that electrically operated bus rental services with operators are not entitled to the concessional rate under entry 10(i) merely because the buses run on electricity, and the residual entry applies instead.

Ratio Decidendi: Where a rate notification conditions concessional treatment on inclusion of fuel cost, electricity cannot be treated as fuel by implication, and the residual entry applies if the express condition for the concessional entry is not met.

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