AI OCR 
TaxTMI 
TaxTMI 
TaxTMI 
2024 (3) TMI 259
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....er referred to as 'KSRTC) is chargeable to GST @ 18% under Tariff Heading 9966 i.e., 'Rental Services of Transport Vehicles' in terms of Entry No. 10(iii) of Notification No. 11/2017-CT Rate) dated 28.06.2017? 3.2. Whether the service of providing passenger buses on rent/lease by the applicant to KSRTC would be exempt from payment of GST under Tariff Heading 9966. i.e. 'Services by way of giving on hire to a state transport undertaking, a motor vehicle meant to carry more than twelve passengers' in terms of Notification No. 12/2017-CT(R) dated 28.06.2017 or not? 3.3. If the answer to both the above question is negative, then what is the nature of services provided by the Applicant and what is the rate of tax applicable on such services? 4. Contentions of the Applicant: 4.1. The applicant submits that M/s Scania Commercial Vehicle India Private Limited 'scania' won the tender invited by KSRTC to lease 25 buses under the condition that the winning bidder has to identify and appoint an operator / who shall lease out the buses to KSRTC. Subsequently the applicant has been identified by scania and intimated KSRTC that the applicant is interested in leasin....
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.... submits that there is a supply of service being provided to KSRTC in terms of section 7 of the CGST Act. The Applicant contended that as there are two parties and there is a consideration for the service. The applicant has rented out its own buses to KSRTC. Consequently, the applicant is of the view that they are liable to pay GST on the said service charges/ amount/consideration received from KSRTC. The rate of tax applicable on the said supply would be 18% in as much as the applicant is also required to make available the drivers, provide for maintenance and upkeep or the buses and the consideration does not include the cost of fuel. In addition to this, the Agreement also provides for the services of 'Sale of space for advertisement' and 'transportation of Cargo/Luggage' for separate consideration from such willing customers. However, KSRTC is of the view that the 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 twelve passengers. According to KSRTC, they are a state transpor....
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....pter, Section or Heading Description of Service Rate (%) Condition (1) (2) (3) (4) (5) 22 Heading 9966 or Heading 9973 Services by way of giving on hire - (a) to a state transport undertaking, a motor vehicle meant to carry more than twelve passengers; or (b) to a goods transport agency, a means of transportation of goods. Nil Nil 4.9. The applicant is a Limited Liability Partnership and KSRTC is a transport undertaking. The applicant has purchased buses and supplied the buses to KSRTC for being run as a 'stage carriage' on the designated routes. The buses shall be operated and maintained by the applicant. Thus, evidently, there is a supply of service by the applicant to KSRTC. The supply is in the course or furtherance of the business of the applicant. The applicant is entitled for service charges which are calculated on kilometer basis. Thus, there is a consideration. Hence, the applicant's interpretation is that all ingredients of Section 7 of the CGST Act are satisfied in the instant case. 4.10. The contract with KSRTC is for providing buses on lease/ rent and further, operation and maintenance of buses on designated routes as provided by KSRT....
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....tween renting and hiring are explained and submits that as per the ratio of the said judgments the transaction is in the nature of renting and not hiring. Judgment of the Hon'ble Supreme Court in State of A P Vs Rashtriya Is-pat Nigam Ltd 2002 89 AIR 1305 SC; Judgment dated 28.01.2011 of the Hon'ble High Court of Andhra Pradesh in G.S.Lamba and Sons Vs State of Andhra Pradesh; Judgment of Honble High Court of Orissa in Krishna Chandra Behera Vs State of Orissa 1991 83 STC 325 (Orissa); CCE V/s Sachin Malhotra 2014 (10) TMI 816 and a similar ruling by CESTAT was in the case of R.S Travels Vs CCE 2008 (12) STR 27 and Judgment of the Hon'ble High Court of Andhra Pradesh in Lakshmi Audio Visual Inc Vs Assistant Commissioner 2001 124 STC 426 Kar. The applicant also relies on a similar matter decided by the Hon'ble Maharashtra Authority for Advance Ruling dated 14.06.2021 in the application of M/s M.P. Enterprises and Associates Limited. Accordingly, the applicant submits that the agreement between the applicant and KSRTC is similar to an agreement for renting of shops, hotels etc to the customers. Thus, the subject transaction is in the nature of 'renting' and no....
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.... submissions made at the time of personal hearing. The question to be answered is regarding the rate of tax on the transaction of providing passenger buses on rent/lease by the applicant to KSRTC as per the Agreement dated 15.09.2017 entered by them with KSRTC. 7.2. The questions on which advance ruling is sought by the applicant falls under the purview of Section 97(2)(b) of the GST Acts "applicability of a notification issued under the provisions of this Act " and hence admitted. 7.3. As per the agreement, the applicant has to provide the required specification of the leased buses along with trained drivers for the operation of such buses. Further, the applicant is solely responsible for operation of the buses in compliance with the routes and timings provided by the KSRTC. The fuel cost of the buses shall be borne by the KSRTC. The applicant will receive service/rental charges daily on a kilometre basis and also additional consideration proportionate to the revenue earned by display of advertisement in the buses and also transportation of cargo/luggage in the buses. 7.4. Kerala State Road Transport Corporation Ltd is established by the Government of Kerala by Notification dat....
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....ng on hire" became a subject matter of dispute in the wake of ruling issued by an Authority for Advance Ruling that the entry at SI. No. 22 of Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017 exempts services by way of giving on hire vehicles to a State Transport Undertaking or a local authority and not renting of vehicles to them relying on certain case laws pertaining to the erstwhile service tax regime. 7.9. Therefore, a clarification was issued by CBIC in Para 8.4 of Circular No. 164/20/2021-GST dated 06.10.2021, which reads as follows; "8.4 The issue was placed before the 45th GST Council Meeting held on 17.09.2021. As recommended by the GST Council, it is clarified that the expression "giving on hire" in SI. No. 22 of the Notification No. 12/2017-CT (Rate) includes renting of vehicles. Accordingly, services where the said vehicles are rented or given on hire to State Transport Undertakings or Local Authorities are eligible for the said exemption irrespective of whether such vehicles are run on routes, timings as decided by the State Transport Undertakings or Local Authorities and under effective control of State Transport Undertakings or Local Authorities which....