TaxTMI 
TaxTMI 
TaxTMI 
2025 (11) TMI 1624
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...., and groups, available on daily, weekly, or monthly rentals for leisure use. Vehicles are supplied without drivers and strictly for personal use; they cannot be used for transporting passengers or goods for hire, taxi operations, or other commercial purposes. Customers arrange their own fuel and must return the vehicle with the same fuel level as at delivery. Rental packages vary by mileage, vehicle type, and downtime charges. All vehicles are GPS-enabled, allowing real-time monitoring of location, speed, fuel level, tyre pressure, and driver behaviour. The system detects unauthorized use, tampering, and entry or exit from designated areas, and enables remote immobilization if needed. This ensures the company retains full control over its vehicles and can enforce compliance with the rental agreement. 4.2. Applicant's Interpretation of Law and Position on Taxability are as follows. 4.2.1. The Government has notified the GST rates for supply of services under Notification No. 11/2017-Central Tax (Rate) dated 28 June 2017 and prescribed service codes in the Scheme of Classification of Services, which serve as a guiding tool for classification by both the assessee and the ta....
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....al services without operator" under Heading 9973(viii) with an applicable GST rate of 18%. 5. Comments of the Jurisdictional Officer The application was forwarded to the jurisdictional officer as per provisions of section 98 (1) of the CGST Act. The jurisdictional officer reported that the questions raised in the Advance Ruling application are not pending or decided in any proceedings under any of the provisions of the Act, under the jurisdiction of that office. 6. Personal Hearing: The applicant was granted an opportunity for a personal hearing on 19-05-2025 Shri. Stanly James, Chartered Accountant represented for the applicant .in personal hearing. In the hearing, he explained the nature of activity undertaken by the applicant and reiterated the contentions submitted in the written application. 7. Discussion and Findings: 7.1. On review of the application, facts, and hearing submissions, it is found that the questions fall under Section 97(2) (b) and (e) of the CGST Act, relating to notification applicability and tax liability determination. The application is therefore admitted for consideration on merits. 7.2. The first issue for consideration is the classi....
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....onfirmed that rentals without operator are classifiable under SAC 9973, while rentals with operator remain within SAC 9966. 7.4. (Applicable GST Rate and Notification Provisions:) At this juncture, having identified Heading 9973 as the relevant classification for the service in question, it becomes necessary to examine the evolution of rate provisions under Serial No. 17 of Notification No. 11/2017-Central Tax (Rate) dated 28.06.2017 and its subsequent amendments. The GST rate applicable to leasing/rental of goods under Heading 9973 has undergone multiple changes through Notification No. 01/2018-CT (Rate), Notification No. 27/2018-CT (Rate), and Notification No. 20/2019-CT (Rate). These amendments have introduced new sub-entries, clarified the scope between "with operator" and "without operator" rentals, and changed the linkage between service rates and goods-equivalent rates. Three primary entries in Notification No. 11/2017 are relevant for leasing/rental of goods without operator: (i) Entry 17(iii) - Transfer of the right to use goods (TOTRU) • Covers situations where there is a transfer of the right to use goods for consideration, falling within t....
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....sive possession contemplated under the BSNL test. The hirer's use of the vehicle is permissive and subject to ongoing control, rather than an unfettered right to use. The Kerala AAR in Indus Motor Company applied the BSNL test and held that vehicle rental contracts without operator did not constitute transfer of the right to use because effective control was not transferred. Similarly, the Karnataka AAAR in Yulu Bikes ruled that providing cycles for self-use did not transfer possession in the legal sense; mere access without legal possession does not amount to transfer of the right to use goods. 7.6. Once it is established that Entry 17(iii) for "transfer of the right to use goods" does not apply, the classification under Serial No. 17 of Notification No. 11/2017-CT (Rate) narrows down to two possibilities-Entry 17(viia) and Entry 17(viii). In Indus Motor Company Pvt. Ltd. (Kerala AAR, July 15, 2024), the AAR held that self-drive rentals fall under Entry 17(viii)-the residual "leasing or rental services, without operator" and accordingly applied the flat 18% rate under that entry. Conversely, in Yulu Bikes Put. Ltd. (Karnataka AAAR, February-2, 2021), the Appellate Authority....
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.... pertinent to note that while the subject matter of the lease is a tangible good, the nature of supply under GST law is a service. Section 2(102) of the CGST Act defines "services" to include "anything other than goods, money and securities," and Schedule II, para 5(f) expressly treats "transfer of the right to use any goods for any purpose for consideration without transfer of title" as a supply of service. The present arrangement falls squarely within this description. Therefore, given that the nature of supply is a service of leasing/renting goods, the transaction aligns fully with 17(viia) and does not require recourse to the fallback 17(viii). The residual entry should be applied only when the activity cannot be brought within any of the earlier, more specific sub-entries, which is not the case here. 7.10. Now coming to the questions raised by the applicant, the first question is: "Whether the services rendered by the applicant fall under the chapter 99, heading 9973 and service code 997311?" The classification analysis set out in para 7.3 above is relevant here. Notification No. 20/2019-Central Tax (Rate) dated 30.09.2019 made substantive changes not only to Heading 9966 b....