TaxTMI 
TaxTMI 
TaxTMI 
2021 (6) TMI 522
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.... terms of Notification No.12/2017-CT(R) dated 28.06.2017 or not? 2. Whether the service of operating mini AC buses by the applicant for BEST would be subject to GST @12% under Tariff Heading 9966 i.e. 'renting of any motor vehicle designed to carry passengers where the cost of fuel is included in the consideration charged from the service recipient' inserted by way of Notification No.31/2017 dated 13.10.2017? (Amended Notification No.11/2017-CT(R) dated 28.06.2017). 3. Whether the service of operating mini AC buses by the applicant for BEST would be subject to GST @18% under Tariff Heading 9966 i.e. 'rental service of transport vehicles with or without operators' under Notification No.11/2017-CT(R) dated 28.06.2017? At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression 'GST Act' would mean CGST Act and MGST Act. 2. FACTS....
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....d separately..." 2.6 Thus, in terms of above agreement, applicant raised invoice on BEST for service charges along with GST @12% under Tariff heading 9966 in terms of amended Notification No. 11/2017-CT(R) ibid. 2.7 According to the applicant, there is a supply of service being provided to BEST in terms of section 7 of the CGST Act for which consideration is received. Since applicant has rented out its own buses to BEST, they are of the view that they are liable to pay GST on the said service charges/consideration received from BEST. The rate of tax applicable on the said supply would be @12% in terms of Notification No. 11/2017-CT(R) dated 28.06.2017 as amended by Notification No.31/2017-CT(R) dated 23.10.2017, in as much as the cost of fuel is included in the service charges paid to the applicant by BEST. However, BEST (service recipient) is of the view that services provided by the applicant is exempt from payment of GST in terms of Notification No. 12/2017-CT(R) dated 28.06.2017 (being 'services by way of giving on hire to a state transport undertaking, a motor vehicle meant to carry more than 12 passengers'). B. Statement containing the Applicant's interpretation of Law and....
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....ete dedication to BEST. Applicant has no right and/or authority in deciding routes, schedules and the frequency of the buses and to decide the fares. Even though the drivers are appointed by the applicant, it is BEST which decides the routes for them. The said activity, according to applicant, shall amount to 'renting of motor vehicle' and qualify as a taxable activity @12% under Notification No.11/2017-CT(R) dated 28.06.2017 for the reasons explained infra. 2.13 The activity, in the instant case, would be renting and not hiring. In case of renting, there is a transfer of possession & effective control to another person. (State of AP V/s Rashtriya Ispat Nigam Limited 2002 89 AIR 1305 SC). In the instant case, the 'effective control' of the vehicle is with BEST in entirety. The passengers boarding the buses do not even know that the buses are owned and operated by the applicant. The primary activity of "actual running" of buses is carried out by BEST. This fact is conclusive evidence that the goods (buses) are under the effective possession, control and enjoyment of BEST. Thus, it is clear that the applicant has rented out these buses to BEST. 2.14 The above submission is supporte....
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....g. The transaction between BEST and its passengers is one of hiring. The passenger pays the designated fare for transportation. Service charges paid to applicant are neither based on the number of passengers nor based on the number of buses. Rather, it based on kilometers run by the buses. Thus the activity, in the instant case, is not one of hiring but renting of the buses. 2.19 Hence, it is submitted that the service provided by the applicant is one of giving buses on rent to BEST. It will not amount to hiring. Residuary Entry 2.20. The second issue that needs consideration is one of rate of tax. GST Tariff Act, 2017 provides for three kinds of categories of 'renting' under Tariff Heading 9966 as notified by Notification No.11/2017-CT(R) dated 28.06.2017 amended by Notification No. 31/ 2017-CT(R)dated 23.10.2017), namely- 1. Renting of any motor vehicle designed to carry passengers where the cost of fuel is included in the consideration charged from the service recipient, wherein the GST rate is 5% provided that no ITC is availed; 2. Renting of any motor vehicle designed to carry passengers where the cost of fuel is included in the consideration charged from the service re....
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....aken by BEST. Hence, the activity of renting of motor vehicles by the applicant would not fall under this entry as welt. 2.27 In view of the above discussion, it is clear that applicant would be covered by the second entry under Tariff Heading 9966. Hence, the activity will squarely fall under 'renting of any motor vehicle designed to carry passengers where the cost of fuel is included in the consideration charged from the service recipient' at the rate of 12% in terms of amended Notification No.11/2017-CT(R). 03. CONTENTION - AS PER THE CONCERNED OFFICER: The jurisdictional officer has not made any submissions. 04. HEARING 4.1 Preliminary hearing in the matter was held on 09.03.2021. Shri. Mahesh Bhoite from applicant side and Shri. Bharat Raichandani, Advocate & authorized representative of the applicant was present. Jurisdictional officer Shri. Prakash Kulkarni, Deputy Commissioner, PUN-VAT-E-612 was also present. The authorized representative made oral submissions and application was found proper. 4.2 The application was admitted and called for final hearing on 16.03.2019. Shri. Mahesh Bhoite, Shri. Rishabh Jain (C.A) from applicant side and Shri. Bharat Raichandani, Advo....
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....r the subject activity undertaken by them is "service by way of giving on hire to a state transport undertaking, a motor vehicle meant to carry more than twelve passengers" or not. 5.6 We find that in the instant case, the applicant has an agreement with BEST for operation and maintenance of AC mini buses in Mumbai and suburban areas. The applicants owns buses, provides drivers and also incurs expenses on fuel and maintenance of the buses. For all these services provided by the applicant, BEST is paying them service charges on kilometer basis. 5.7 We also find that it is the BEST which controls the deployment of the fleets, the schedules and routes and also the applicant's drivers for operating these buses. A perusal of the agreement reveals that the applicant cannot run the buses on their own because the overall control of the buses is with BEST. Even the buses are required to be as per the specifications approved by BEST. 5.8 As per the agreement, Vehicle Registration Charges, Insurance premium for the Buses and other assets owned by the Operator and Motor Vehicle tax within Municipal Limit of Mumbai area will be paid by applicant whereas passenger tax, stage carriage permit, ....
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....les (i) Renting of motorcab where the cost of fuel is included in the consideration charged from the service recipient 2.5 Provided that credit of input tax charged on goods and services used in supplying the service has not been taken [Please refer to Explanation no. (iv)] (ii) Rental services of transport vehicles with or without operators, other than (i) above. 9 ---- In the subject case, there is a supply of rental services of transport vehicle where the operator (driver) is also supplied by the applicant to BEST. Hence such rental services of buses as in the subject case would attract 18% GST. However Notification No. 11/2017-CT (Rate) dated 28.06.2017 was amended by Notification No. 31/2017-CT (Rate) dated 13.10.2017 and as per the amendment the Sr No. 10 is as under:- SI.No. Chapter, Section or Heading Description of Service Rate (Per cent.) Conditions 10 Heading 9966 (Rental services of transport vehicles ("(i) Renting of any motor vehicle designed to carry passengers where the cost of fuel is included in the consideration charged from the service recipient. 2.5 Provided that credit of input tax charged on goods and services used in supplying the service,....