Supply of bus service

[Kaustubh Karandikar]

XYZ(Proprietor) supplying Bus service to PQR Pvt.Ltd. for transporting their employees from factory to nearby destinations. In the month of January’21, XYZ crossed the threshold limit of ₹ 20 Lacs from this business.

1) Whether XYZ is required to register with GST and pay GST under forward charge or

2) PQR was required to pay GST under reverse charge?

AI Summary

Reverse charge mechanism applies where bus service is rental to a company, shifting GST liability to the recipient.
Classification of the bus service controls GST liability: if the supply is renting of a motor vehicle to a corporate (often including operator and fuel), the reverse charge mechanism applies and the recipient bears GST; if it is passenger transportation on predetermined routes/schedules it is forward charge. Critical facts include the contracting party, fixed routes/schedules, duration of hire, and inclusion of operator/fuel. If all supplies by the proprietor are under RCM, the proprietor may not need GST registration.