TaxTMI 
TaxTMI 
TaxTMI 
2025 (10) TMI 53
X X X X Extracts X X X X
X X X X Extracts X X X X
....on No. 11/2017-CT(R) dtd. 28.06.2017, as amended? (2) If the answer to question 1 is No, whether renting of aircraft without operator can be classified under HSN code 9973-Leasing or rental services without operator-Sl. No. 17(viia) of Notification No. 11/2017-CT(R) dtd. 28.06.2017, as amended ? (3) What will be the GST rate applicable on the leasing of helicopter/aircraft services provided by the company ? 4. The applicant further submits as under: - (a) The company enters into a dry lease agreement with its customers for leasing of helicopter/aircraft. The word 'dry lease' is not defined in the GST Act but a 'dry lease agreement' in the aviation industry refers to a contract where an aircraft owner (lessor) provides only the aircraft to another airline (lessee), without including any crew, maintenance, or insurance. This means that the lessee is fully responsible for all operational aspects of the aircraft, including staffing and upkeep, essentially 'renting a bare plane' to operate under their own terms and regulations. (b) Under the 'dry lease agreement', the lessee takes full responsibility for managing the aircraft, including hiring thei....
X X X X Extracts X X X X
X X X X Extracts X X X X
....per their agreement all the above conditions have been fulfilled. As all the conditions laid down by the Supreme Court to classify the transactions are fulfilled, the service provided by the company to the lessee shall be classified under Clause (iii) of SI. No. 17 of the Notification No. 11/2017-CT(R). (k) As per the said Sr. No., the GST rate applicable shall be the 'same rate of central tax as on supply of like goods involving transfer of title in goods', Accordingly, since the goods involved in the transfer of title is the helicopter, the GST rate applicable on the helicopter shall be applicable on the services provided by the company. (l) The aeroplane or helicopter leased by the Company to the lessee are not to be used by the lessee for its personal use and thus as per Sr. No. 244 of the Notification as amended, helicopters shall attract GST rate of 5%. As the company is a SEZ unit, it shall be liable to pay IGST @ 5% on the services of leasing of aeroplanes/helicopters to the lessee located in the DTA unit. (m) Alternately, and without prejudice to the above, if the entry Sr. No.(iii) of the Notification No. 11/2017-CT(R) is not applicable then Cla....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... Heading 9966 - Rental services of transport vehicles with or without operators and Heading 9973 - Leasing or rental services with or without operator. Therefore, both the entries dealt with rental services with or without operator. 10. The classification of services adopted for the purposes of GST is a modified version of the United Nations Central Product Classification (UNCPC). To align the classification with the description of services under the UNCPC, heading 9966 and Heading 9973 were amended vide Notification No. 20/2019-CT(R) dtd. 30.09.2019. Heading 9966 was amended to read as "Rental services of transport vehicles with operators" and Heading 9973 was amended to read as "Leasing or rental services without operator". Therefore, post 01.10.2019, this amendment has made it clear that Leasing or rental services without an operator would fall under Heading 9973. 11. We find that in Chapter 99, Section 7, Heading 9973 there are presently six entries. The same is mentioned in Notification No. 11/2017-CT(R) dtd. 28.06.2017, as amended, and is reproduced below: - SI.No. Chapter, Section or Heading Description of Service Rate (per cent.) Condition 1 Chap....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... based on the explanatory notes to the UNCPC. Therefore, we take recourse to the explanatory notes to the UNCPC. The relevant entry in the explanatory notes to the UNCPC is reproduced below: - Detailed structure and correspondences Corresponding Group Class Subclass Description HIS 2007 CPC 2 ISIC 4 72223 Sale of time-share properties on a fee or contract basis 72223 6820 7223 72230 Land sales on a fee or contract basis 72230 6820 7224 72240 Real estate appraisal services on a fee or contract basis 72240 6820 Division 73 Leasing or rental services without operator 731 Leasing or rental services concerning machinery and equipment without operator 7311 Leasing or rental services concerning transport equipment without operator 73111 Leasing or rental services concerning cars and light v....
X X X X Extracts X X X X
X X X X Extracts X X X X
....rvices of an aircraft without operator would fall under the Heading 9973, more specifically under SAC 997311. Further, we also find that the Appellate Authority for Advance Ruling, Karnataka in Re: Yulu Bikes Pvt Ltd. [2021 (48) G.S.T.L. 187 (App. A.A.R. - GST - Kar.] has while dealing with the classification of renting of e-bikes, bicycles without operator has held as under:- "The Heading 9973, post the amendment, covers all leasing and rental services without an operator. The explanatory notes to the scheme of classification of services states that the Heading 9973 includes rental or operational leasing of machinery and equipment and personal and household goods, without operator. Admittedly there is no mention of transport vehicle in Heading 9973. However, the use of the word 'includes' in the explanatory notes to Heading 9973 implies that a wider meaning can be given to the scope of the said Heading and hence renting of all goods without an operator would get covered under the ambit of this heading. The e-bikes and bicycle rented out by the Appellant are essentially "goods" as they are movable property." 14. We find that there are two contending entries in Notificat....
X X X X Extracts X X X X
X X X X Extracts X X X X
....isfied. We also find that as per Para 10.1 of the agreement, the applicant is required to provide the helicopter on dry lease in airworthy condition with all valid licences, documents, manuals in accordance with the manufacturer and in conformity of the Indian DGCA. Thus, all the licences to operate the aircraft is supplied to the lessee by the applicant. Further, as per Clause 6.1 of the agreement, the lessee is responsible for the timely replacement of each and every component, spares, aggregates and avionics equipment during the lease period free of cost, which may fall due or become defective. As per Clause 6.2, all expenses related to lease of the helicopter including fuel, oil, grease, landing fees, passenger fees, insurance etc, shall be borne by the lessee. As per Para 11.5, the lessee shall be responsible for modifications, painting/repainting of the helicopter, transfer/retransfer maintenance program, and/or other local CAA authority. As per Para 14.1 and 14.2, the lessee shall take full and complete insurance for the possible damage or loss of the helicopter from the date of change of certificate of registration till the re-delivery of the helicopter. The lessee shall al....