AI Drafter 
TaxTMI 
TaxTMI 
2026 (5) TMI 117
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....3. The applicant, has stated as follows: (a) the flagship program of the Union Government is to promote electrical mobility viz. the National Electric Bus Program (NEBP) which targets to deploy 50,000 electric buses in various States of India; (b) that the procurement and deployment of electric buses under NEBP is undertaken following the GCC methodology, whereby the Original Equipment Manufacturers (OEM) of the buses are- o required to float a Special Purpose Vehicle (SPV) & procure buses of prescribed standard and quantity; o the SPVs employ necessary staff and charging infrastructure; o that the buses are operated on the prescribed routes & all expenses related to such operation is on the account of SPV; o that consideration is on per kilometer basis i.e. a fixed price is paid to the SPVs by the service recipient for undertaking these services. (c) under NEBP, a request for proposal bearing no. CESL/6/2022-23/E-buses/GC-2/222309007 dated 21.9.2022 was floated for procurement, operation and maintenance of 150 nos. of 12 m BRTS air-conditioned buses in the city of Surat; (d) the applicant participated & emerge....
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....for the purposes of the GST law, is Surat Sitilink Company, a private limited Company incorporated under the provisions of the Companies Act, 2013 as Surat Sitilink Limited is liable to the pay the consideration to the Applicant. (e) That the present services are classifiable under Heading 9966, and fall under Sl. No. 10 of Notification No. 11/2017 (Central Tax-Rate) dated 28.06.2017. (f) As per the said entry, in cases where passenger vehicles are given on rent, and the cost of fuel is included in consideration charged, the supplier has an option to levy GST at 5%, without availing input tax credit or levy GST at 12%, availing input tax credit. In cases wherein the cost of fuel is not included in the consideration charged, GST would be leviable at 18%. (g) That there is an ambiguity which has led to making the present application, which is that the subject buses are battery-operated and run on electrical energy which is stored within the battery packs fitted on to the body of the buses. The controversy arises as to whether "electricity", can be regarded as fuel and the GST be applicable at the rate of 5% / 12%. Alternatively, in case the 'electricity' is....
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.... various publications, the term "fuel" can be commonly understood as a substance that is burned or otherwise consumed to produce energy, typically in the form of heat or power. (e) Fuels include solid fuels (such as coal and wood), liquid fuels (such as petrol and diesel), and gaseous fuels (such as natural gas and LPG). These fuels are primarily used to power internal combustion engines or other machinery that relies on combustion. (f) Electricity, on the other hand, is a secondary energy source generated through the conversion of primary energy sources such as coal, natural gas, nuclear, solar, or wind energy. Unlike conventional fuels, electricity is not a combustible substance but an energy carrier. (g) In the case of electrically operated vehicles, energy is stored in batteries in the form of electrical energy. These batteries are recharged using electricity supplied from external sources, such as power grids, which are often generated through the combustion of fuels or renewable energy sources. This fundamental distinction underscores that electricity itself is not a fuel but a form of energy derived from various sources, including but not limited t....
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....ideration charged by the Applicant does not include the cost of fuel as the Subject E-Buses are not fuel operated vehicles. o The rental services are provided with the operators. (p) Entry (iii) of the SI. No. 10 of the Tax Rate on Services Notification is wider and covers rental services all the vehicles, including electrically operated vehicles which are meant for transport. Accordingly, the said entry would squarely rental services of electrically operated vehicles where such services are provided along with operators. (q) Therefore, given the above, the services provided by the Applicant are squarely covered under SI.No. 10(iii) of the Rate Notification and appear to be taxable at the rate of 18%. 7. Personal hearing was granted on 06.02.2025 wherein Shri Kavish Goyal, Tax Head, JBM and Shri Rohan Pahwa, Advocate appeared for the applicant and reiterated the facts & grounds as stated in the application. Discussion and findings 8. At the outset, we would like to state that the provisions of both the CGST Act and the GGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisio....
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..... Some of the other relevant clauses of the Concession Agreement are reproduced below:- 5.5.10 The Operator shall be responsible for all the costs and expenses for employment of drivers and other personnel including but not limited to expenses for travel, training of its employees, and payment to vendors engaged by the Operator in connection with the implementation of this Project. 16.4.1 The Parties agree that the Authority shall have the exclusive right to determine routes, frequency and schedule of the buses as part of Deployment Plan throughout the Contract Period. The Authority shall provide the routes to the Operator for operation of the buses as specified in Schedule-J (the 'Deployment Plan'). All Operational Routes will be such that their origin, destination and opportunity charging location is one or more Maintenance Depots allocated to the Operator as per Schedule-A. The Explanatory Notes to Scheme of Classification of Services under GST for SAC 996601 is as under:- "This service code includes rental of buses or coaches, trucks and other motorized freight vehicles, with operators for a period of time, not generally dependent on distance. The ....
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....nt of Rs. 20 (2.5% of Rs. 800) and not Rs. 48. or 6 [Up to 21/09/2025] 9 [Substituted by Noti. No. 15/2025-Central Tax (Rate) dated 17.09.2025 w.e.f. 22.09.2025 for "6"] - [(ia) Renting of goods carriage 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, other than the input tax credit of input service in the same line of business has not been taken: [Please refer to Explanation no. (iv)] Provided further that where the supplier of input service in the same line of business charges central tax at a rate higher than 2.5%, credit of input tax charged on the input service in the same line of business in excess of the tax paid or payable at the rate of 2.5% shall not be taken. or 6 [Up to 21/09/2025] 9 [Substituted by Noti. No. 15/2025-Central Tax (Rate) dated 17.09.2025 w.e.f. 22.09.2025 for "6"] - (ii) Time charter of vessels for transport of goods 2.5 Provided that credit of input tax charged on goods (o....
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....fine 'fuel' as a combustible material-such as coal or gas-that is burned to produce heat or power, 'electricity' occupies a different category. Electricity is a secondary energy carrier rather than a primary fuel source. Unlike physical fuels, electricity is not a combustible substance; rather, it is a form of energy generated through the conversion of primary sources. Therefore, scientifically speaking, electricity is the result of energy conversion, not the raw material used to initiate it. A clear distinction exists between combustible fuels and electrical energy, as under: * Fuel: A primary energy source (e.g., hydrocarbons) containing chemical potential energy released through combustion. * Electricity: A secondary energy derivative. It is a flow of charge generated by converting primary sources-such as the thermal energy from burning coal or the kinetic energy of win Because electricity is not "consumed" through combustion to create energy, but is itself the energy being transmitted, it cannot be classified as a fuel in the traditional or scientific sense. 15. We are also aware that the legislature has granted exemption to electric vehicles given on hi....