GST Applicability

[Ethirajan Parthasarathy]

Can experts clarify whether sale of “route permit” for buses attracts GST. If yes, whether it is “Goods”or “Services”. Sale is permitted only with prior approval of transport authority.

[Amit Agrawal]

'Services by way of granting National Permit to a goods carriage to operate through-out India / contiguous States' are exempted under Serial No. 61A of Notification No. 12/2017- Central Tax (Rate) (as amended till date)

[Amit Agrawal]

I have not understood what you meant by 'sale' of route permit.

Are you talking about transfer of such permit between two parties (are such things permitted under law?) or only about, grant of permit by transport authority on payment of prescribed charges?

[Ethirajan Parthasarathy]

Thanks for Mr.Amit for your response. "A" has obtained permission for operating his bus as stage carrier b/w two cities from transport authority. This is called route permit which is displayed in the bus itself to prove that it is authorised passenger bus.

My query is "A" transfers this route permit to "B" for a consideration after obtaining authorisation from the transport authority.

The query is whether consideration received by "A" is subject to GST.

[Amit Agrawal]

If "A" is given his bus on hire charge basis to "B" and this "transfer of route-permit from A to B" is part of process of giving bus on hire, then, "transfer of route-permit from A to B" cannot be a separate / independent transaction. And if so, gst liability will be against 'entire consideration' as 'Bus given on hire' (i.e. even if separate charges are recovered against "transfer of route-permit from A to B").

If "A" has sold his bus to "B" and this "transfer of route-permit from A to B" is part of process of selling the bus, then, "transfer of route-permit from A to B" cannot be a separate / independent transaction. And if so, gst liability will be against 'entire consideration' as 'Sale of Bus' (i.e. even if separate charges are recovered against "transfer of route-permit from A to B").

Can there be "transfer of route-permit from A to B" without bus given on hire or sale of bus? if yes, one needs to delve deeper and understand entire concept from motor-vehicle act point of view (which I am currently unaware of) before commenting on the query raised.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

[Amit Agrawal]

Kindly also go through Instruction No. 01/2022-GST dated 10th November, 2022, issued by CBEC, so as to have better perspective to deal with the issue on hand.

[Amit Agrawal]

Please ignore my last post at serial No. 5 above. It got posted by mistake here.

[Padmanathan KV]

Does "route permit" mean stage carriage permit under MV Act?

[Ethirajan Parthasarathy]

Dear Padmanathan,

Yes, it is stage carriage permit under MV Act

AI Summary

GST on transfer of route permit: treated as part of bus hire or sale, taxable on entire consideration.
Taxability of consideration for transfer of a stage carriage permit depends on context: where the transfer is integral to hiring the bus or sale of the bus, it is not a separate supply and GST applies to the entire consideration as bus hire or sale. A standalone transfer of the permit requires analysis under motor-vehicle regulatory provisions to determine permissibility and GST treatment; reference was made to an exemption relating to grant of permits and a CBEC instruction for further guidance.