Would GST be applicable on the portion of statutory levy charged by Automated Testing Station (ATS) for grant of fitness certificate to vehicles ? Also RCM applicable thereto.

[Gautam Godhwani]

The ATS does not accept the full payment of the statutory levy as prescribed in the Motor Vehicle Rules. First the vehicle owner goes to the ATS, makes partial payment and gets an acknowledgement - then goes to the RTO which makes invoice on the full amount but the vehicle owner need pay only the remaining amount.

After this the vehicle owner takes the receipt back to the ATS or fitness center, which then provides the fitness certificate.

Lets say the statutory levy for heavy vehicle is Rs 1000 and the ATS takes part payment of Rs 400. Would GST be payable on this Rs 400 ?

Also, would the vehicle owner be liable to pay RCM on the entire Rs 1000 ?

[KASTURI SETHI]

Sh.Gautam Godhwani Ji,

My reply is in Q & A form.

(1) Whether issuance of fitness certificate for motor vehicle is supply of service or not as per Section 7 of CGST Act ?

Ans. Yes. It is supply of service. The activity or transactions carried out by the Central Govt., State Govt. etc. in which they are engaged as public authorities against a consideration shall constitute a supply of service and the same is leviable to GST except those activities or transactions which are specifically notified as non-supplies under Section 7(2) (b) of CGST Act. This service is not notified as non-supply under Section 7 (2) of CGST Act

Q.No.2 If it is a supply of service whether it is exempted or not ?

Ans. It is not exempted service. The following services, inter alia, provided by Central Govt., State Govt. etc are exempted vide Notification No.12/17-CT (R) dated 28.6.17 as amended :-

(i) Services described in Article 243 G of Constitution of India to Panchayat

(ii) Services described in Article 243 W of Constitution of India entrusted to Municipalities

(iii) Specified taxable services provided to persons (recipients) other than business entity.

(iv) Specified taxable services provided to business entity having turnover within threshold limit.

(v) Specified taxable services where consideration does not exceed Rs.5000/-

The categories mentioned at (i), (ii) & (iii) of the above are not applicable to your client. In case your client is covered under the category (iv) or (v), exemption from GST is available and hence GST is not payable under RCM.

Q.No. 3 Whether recipient of supply of service is a business entity or not ?

Ans. Service Receiver is a business entity because from the query itself it appears that the recipient of fitness certificate for motor vehicle is a business entity.

Q.No. 4 If supply of service is taxable whether it is covered under RCM in terms of Notification No..13/17-CT (R) dated 28.6.17 as amended ?

Ans. Yes, it is covered under RCM.

Relevant extract of Notification No.13/17-CT (R ) dated 28.6.17 as amended.

5	Services supplied by the Central Government, State Government, Union territory or local authority to a business entity excluding, - (1) renting of immovable property, and (2) services specified below- (i) services by the Department of Posts by way of speed post, express parcel post, life insurance, and agency services provided to a person other than Central Government, State Government or	Central Government, State Government, Union territory or local authority	Any business entity located in the taxable territory.
	Union territory or local authority; (ii) services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport; (iii) transport of goods or passengers.

Service provided by Govt. does not fall under exclusion clause at serial no.5 (1) & (2) of the above Notification. Hence covered under RCM.

Q. No. 5 : Whether statutory fee of Rs.1000/- conforms to the definition of ‘consideration’ under Section 2 (31) of CGST Act ?

Ans. Yes. Fee is in lieu of service. It is not a tax.

Disclaimer : The above views are my personal and meant for education and instruction purpose. These are for enrichment of knowledge of the readers and NOT meant for legal and Court purpose.

[Padmanathan KV]

Learned Kasturi Ji,

Pls consider the following two exemption entries and share your thoughts?:

47

Heading 9983 or Heading 9991

Services provided by the Central Government, State Government, Union territory or local authority by way of- (a) registration required under any law for the time being in force; (b) testing, calibration, safety check or certification relating to protection or safety of workers, consumers or public at large, including fire license, required under any law for the time being in force.

Nil

Nil

Can vehicle fitness test be considered under the above " testing, calibration, safety check or certification" relating to protection or safety of public at large?

9

Chapter 99

Services provided by Central Government, State Government, Union territory or a local authority where the consideration for such services does not exceed five thousand rupees: Provided that nothing contained in this entry shall apply to- (i) services by the Department of Posts 86[****]; (ii) services in relation to an aircraft or a vessel, inside or outside the precincts of a port or an airport; (iii) transport of goods or passengers: Provided further that in case where continuous supply of service, as defined in sub-section (33) of section 2 of the Central Goods and Services Tax Act, 2017, is provided by the Central Government, State Government, Union territory or a local authority, the exemption shall apply only where the consideration charged for such service does not exceed five thousand rupees in a financial year.

Nil

Nil

Here the consideration is only 1000/- which is below the limit of Rs.5000. Hence, can exemption be claimed under this entry?

[KASTURI SETHI]

Sh.Padmanathan Kollengode Ji,

My view is as under :

Q.No. 1 : NO

Q. No. 2. I have already answered.

AI Summary

Taxability of fitness certificate: GST applies and reverse charge may arise when the recipient is a business entity. Issuance of a motor vehicle fitness certificate by ATS is a supply of service subject to GST; the statutory fee charged is consideration. If the recipient is a business entity the service is within the reverse charge mechanism as notified, unless a specific exemption applies-such as exemptions for certain government services, recipient categories, or where the consideration falls below the small-amount threshold. An alternative argument invoking testing/certification or small-amount exemption was noted but not accepted in the primary analysis.