AI Drafter 
TaxTMI 
TaxTMI 
2023 (3) TMI 1257
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....to pay tax on any goods or services or both. Proviso with reference to the Section 98(2) of CGST Act, 2017 states that where the questions raised in the application is already pending or decided in any proceedings in the case of the applicant under any provision of this Act, the application may be rejected by the Advance Ruling Authority after providing an opportunity of being heard to the applicant. In the present case, the applicant has undertaken in form ARA-01 that the issue is neither pending nor decided in any proceedings under any of the provisions of the Act. Besides the applicable lees in the case stands paid. So, he is eligible to seek an Advance Ruling under the above provisions and the case is being heard on merits. Statement of facts as per ARA-01 1. M/s Dream Road Technologies Private Limited (hereinafter referred to as the "Applicant") is a Car leasing Company with the name "PumPumPum". The Applicant provides the private number (White Plate) of pre-owned cars on lease to the individuals. 2. The Applicant is engaged in providing pre-owned vehicles obtained from different modes of supply on operating leases to its customers. 3. The Applicant enters into ....
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....hich qualify as 'Supply', as may be applicable, except the supplies which are outside the purview of GST i.e. non-Taxable Supplies. 3. Schedule II of the CGST Act lays down the transaction to be treated as a supply of goods or services. The relevant Extracts of the same are reproduced below:- "ACTIVITIES [OR TRANSACTIONS] TO BE TREATED AS SUPPLY OF GOODS OR SUPPLY OF SERVICES" 1. Transfer (a) any transfer of the title in goods is a supply of goods (b) any transfer of right in goods or of undivided share in goods without the transfer of title thereof is a supply of services; (c) any transfer of title in goods under an agreement which stipulates that property in goods shall pass at a future date upon payment of full consideration as agreed is the supply of goods." Thereby under GST what is important to determine whether the supply is the "supply of goods" or "supply of services" is the "Transfer of title". In simple words, it could be said that any transfer of rights in goods without the transfer of title thereof is the supply of services or any transfer of title in goods under an agreement that stipulates that property in go....
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....tates the applicable tax shall be "the same rate of central tax as applicable on supply of like goods involving the transfer of title in goods". Technically speaking words "like goods" are nowhere defined in the said notification, thereby we fall back to Central Goods and Service Tax Rules, 2017. Relevant extracts of Explanation (b) to Rule-35 of Central Goods and Service fax Rules, 2017:- "supply of goods or services or both of like kind and quality" means any other supply of goods or services or both made under similar circumstances that, in respect of the characteristics, quality, quantity functional components, materials and the reputation of the goods or services or both first mentioned, is the same as, or closely or substantially resembles, that supply of goods or services or both". 6. From the above discussion words "like goods" shall mean, goods that are the same in respects, including physical characteristics, quality, and reputation as the goods being valued except for minor differences that do not affect the value of goods. Thus for a business like an applicant is into the business of leasing pre-owned cars, "like goods" shall be old and used cars. 7. A....
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....ate has been obtained,- (l) the receipt obtained under sub-section (2) of section 48; or (II) the postal acknowledgment received by the transferred if he has sent an application in this behalf by registered post acknowledgment due to the registering authority referred to in section 48, together with a declaration that he has not received any communication from such authority refusing to grant such certificate or requiring him to comply with any direction subject to which such certificate may be granted; (b) the transferee shall, within thirty days of the transfer, report the transfer to the registering authority within whose jurisdiction he has the residence or place of business where the vehicle is normally kept, as the case may be, and shall forward the certificate of registration to that registering authority together with the prescribed fee and a copy of the report received by him from the transferor in order that particulars of the transfer of ownership may be entered in the certificate of registration." 9. Further perusal of SBI guidelines indicates that it is charging different rates of interest on Car Loan funding in the case of old cars v/s ne....
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....ate) dated 25th January 2018 notifies the rate of central tax for the sale of old and used cars. Extracts of the same are stated below:- "In exercise of the powers conferred by sub-section (1) of section 11 of the Central Goods and Services Tax Act, 2017 (12 of 2017), the Central Government, on being satisfied that it is necessary in the public interest so to do, on the recommendations of the Council, hereby exempts the central tax on intra-state supplies of goods, the description of which is specified in column (3) of the Table below, falling under the tariff item, sub-heading, heading or Chapter as specified in the First Schedule to the Customs Tariff Act, 1975 (51 of 1975), as are given in corresponding entry in column (2), from so much tax as specified in Schedule IV of Notification No. 1/2017-Central Tax (Rale), as is in excess of the amount calculated at the rate specified in the corresponding entry in column (4) of the said Table on the value that represents the margin of the supplier, on supply of such goods: - Explanation - For the purposes of this notification,- S.No. Chapter, Section or Heading or tariff item Description of Goods Rate (1)....
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....e and does not avail any input tax credit as defined in clause (63) of section 2 of the Central Goods and Services Tax Act, 2017, CENVAT as defined in CENVAT Credit Rules, 2004 or the input tax credit of Value Added Tax or any other taxes paid, on such "Old and used cars". Thus, from a conjoint reading of the above notifications, it appears that the GST rate for the sale of old and used cars shall be 18% or 12% depending upon the dimensions of the car. 14. Further, for the reasons recorded above compensation cess on leasing of old and used cars shall be levied by virtue of notification no. 01/2017- Compensation cess (Rale) dated 28th June 2017. The relevant extract of the same reproduce below for reference: - "S.No. Chapter/Heading/ Sub-heading/ Tariff Item Description of Goods Rate of goods and services tax compensation cess (1) (2) (3) (4) 42A. 87 All old and used motor vehicles Explanation: Nothing contained in this entry shall apply if the supplier of such goods has availed input tax credit as defined in clause (63) of section 2 of the Central Goods and Services Tax Act, 2017, CENVAT credit as defined in CENVAT Credit Rules, 2004, or th....
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.... high-quality pre-owned cars. The applicant (PumPumPum) provides the private number (White Plate) of pre-owned cars on lease to the corporates and individuals. The pre-owned cars as provided to the customers on lease are obtained by the Applicant (PumPumPum) from any one of the following three modes of Supply: The Applicant (PumPumPum) is empowering millennials with a smart car subscription model. The company provides monthly subscriptions of pre-owned cars at affordable rates. Customers share their requirements or can select a car from a pool of certified pre-owned cars. The Applicant delivers good quality assured car to the user based on the set of terms of the agreement. The customer has the option to choose the lease period which varies from 6 to 24 months to best that suit their needs. At the end of the lease term, the customer will hand over the vehicle to the Applicant. When the pre-owned vehicle becomes obsolete, the Applicant removes the said vehicle from its fleet and discharges the necessary tax liability on the sale of the old motor vehicle as per the Notification 08/2018 Central Tax (Rate) dated 25th January 2018 in case the sale proceeding exceeds the written down ....
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....ith serial no. 17 (VI) of notification no. 11/2017-CT(R) dated 28.06.2017 as amended which states that the tax is to be charged at 'same rate of central tax as applicable on supply of like goods involving transfer of title in goods.' And the applicable compensation cess is also to be determined in accordance with notification no. 1/2017-compensation cess (Rate) dated 28.06.2017. Meaning thereby that the tax rate on the leasing of the pre-owned vehicle is to be determined as on like goods. And the availment of the input tax credit by the applicant is subject to the conditions prescribed under section 17(5) of the CGST Act, 2017 read with the relevant rules. In the light of the proper officer's comments on the issue at hand mentioned here in above, it can be said that the applicant has not submitted a clear picture on the issue of availment of ITC before the authority. The supply of leasing of the pre-owned vehicles is not covered under the notification no. 8/2018 -Central Tax (Rate) dated 25th January 2018 as this is related to the sale of old and used vehicles. This notification needs to be read with rule 35 of the CGST Rules, 2017. It shall not apply in the case of mot....