TMI Blog2022 (7) TMI 1100X X X X Extracts X X X X X X X X Extracts X X X X ..... arted with the Uttarakhand High Court's. Also, the Honorable Gujarat High Court in the matter of Vijay Travels has held that renting and hiring are not different so far as tax treatment for service lax is concerned. The matter is currently before the Honorable Supreme Court. The different tax liability cannot be fastened on identical service by terming them as rent and hire . Further, it may be noted that under the consideration under the agreement in the form of hire . On a joint reading of the terms of the agreement, high court rulings. Entry No. 10 of Notification No. 11/2017 - Central Tax (Rate) and Entry No. 22 of Notification No. 12/2017 - Central Tax (Rale) it appears that supply covered under the agreement entered into by the applicant with AICTSL is covered under Entry No. 22 of Notification No. 12/2017 - Central lax (Rate) and is an exempt services - also para 8 of Board Circular No. 164/20/2021 GST dated 06.10.2021, perused, wherein it has been clarified on the recommendation of the GST Council that giving on hire in Entry No. 22 of Notification No. 12/2017 - Central Tax (Rate) includes renting of vehicles. Once the supply is exempt, the question relat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n copy of ROC of the three transport companies and the definition of State Transport Undertaking as defined under section 2(42) of Motor Vehicle Act. 1988 provided by the applicant during time of hearing was sent by this authority to the Jurisdictional officer, for perusal and to give the view on the question raised by the applicant as per the document provided by the applicant. The Jurisdictional officer by letter no- 183 Dated 14-03-2022 give a fresh opinion on the issue. The opinion in short given is as follow - In the light of the above facts, the Notification No. 12/2017, dated 28.06.2017 according to heading No. 9966/9973 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. (should not be taxable) 6. RECORD OF PERSONAL HEARING - 6.1 Mr Deepak Asrani. CA on behalf of Applicant appeared for personal hearing and reiterated the submissions already made in the application, and attached additional submissions as follows:- 1) Seeking Ruling that the Whether GST Will be applicable on the services provided b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nable basis. While the BCLL focuses on planning, service standards setting, monitoring and control of quality of services; bus operator will focus on purchase of buses on Viability Gap Funding (VGF). repair and maintenance, availability, cleanliness and deployment and operations (including but not limited to purchase of fuel, tyres, batteries and other consumables, hiring, training and deploying drivers), for Premium per kilo meter for 8 years. In this scheme, the bus operator will operate and maintain buses during Agreement period. Bus operator is also responsible for all statutory, regulatory and legal requirements associated with the bus transport system. The fare-box revenue collection shall be done by the BCLL or Collection Agency assigned by BCLL. Urban Development and Housing Department is responsible only for Comprehensive and Integrated Bid Process Management System till selection of successful bidder and LOI shall be issued and Bus Operator Agreement shall be executed by the respective SPV only. Here M/s Maa Associates fulfil the tender conditions and Qualify for the same and same has been awarded to them. Applicant M/s Maa Associates will raise the Invoice which is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g 2 days in a month for maintenance. If it fails to provide, additional penalty will be charged as per mentioned in the RFP for Deficiency and Incident Wise Damages/ Fines of the agreement. vii. In case of an accident where the bus is detained by police authorities or impounding of vehicle by any other statutory BCLL. penalty will be imposed for the period for which the vehicle is detained or impounded As per the Applicant services provided (Procure, Operate Maintain Buses having capacity of more than 12 passengers) by them to the companies are covered under the Notification No 12/2017 Central Tax (Rate) dated 28.06.2017 6.4 As per Notification No 12/2017 Central Tax (Rate) of CGST dated 28.06.2017 In entry No. 22 Heading 9966 or Heading 9973 Service 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 Rate Prescribed as NIL, with Condition as NIL Whereby State Transport Undertaking has the same meaning as assigned to it in clause (42) of section 2 of the Motor Vehicles Act, 1988 (59 of 1988); As per Clause ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he issue was placed before the 45 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 Slate Transport Undertakings or Local Authorities and under effective control of State Transport Undertakings or Local Authorities which determines the rules of operation or plying of vehicles. 6.6.5 The applicant also submitted letters of the companies from which the applicant got the lender and also the R.O.C of the company. The letters and R.O.C shows that A1CTCL. BCLL. JCTSL arc Slate Government company. 7. DISCUSSIONS AND FINDINGS - 7.1 We have carefully considered the submissions made by the applicant in the application, the pleadings on behalf of the Applicant made during the course of personal hearing and the Department's view provided by the jurisdictional officer. 7.2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ty Transport Services Ltd. regarding its Constitution. 7.7 Perusal of the documents listed above and the application of the applicant, the scope of the services provided and to be received by the applicant under these agreements appear to be as under:- a) The applicant shall provide the buses, operate them (provided Drivers and Fuel) and Maintain the buses; b) AICTSL shall provide the routes on which the buses shall operate and collect revenue from the passengers; and c) The revenue for the work done shall be paid to the applicant as Hire Charges through Escrow Account for the actual effective kilometres run by each bus. The rate per kilometre is decided in the tender. 7.8 There are further details in the agreement regarding the conduct of the parties to the agreement and also the regarding quantification of the consideration under the agreement, however, they need not be discussed since the do not have any bearing on the nature of the service being provided under the agreement, further, the agreements with all the three clients are identical so far as the scope of service is concerned therefore, any reference to agreement hereafter shall refer to each of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for transport of students, faculty and staff, to a person providing services of transportation of students, faculty and staff to an educational institution providing services by way of pre-school education and education upto higher secondary school or equivalent. Nil Nil (emphasis supplied) 7.11 It may be noted that the terms used in the entries above are different, where the term rent is used in entry no. 10 of Notification No. 1 1/2017 - Central fax (Rale), the term hire is used in entry no. 22 of Notification No. 12/2017 -Central Tax (Rate). In the legacy law of Service Tax (Chapter V of the Finance Act. 1994), the matter has been disputed before the many forums and there are judgements differentiating the two terms as well as judgements that have treated the two terms to be same so far as taxation of service under Chapter V of the Finance Act, 1994 is concerned. 7.12 While the Uttarakhand High Court in Commissioner v. Sachin Malhotra - 2015 (37) S.T.R. 684 (Uttarakhand) had held that Renting and Hiring are different activities and are to be treated differently for taxation under the Finance Act. 1994. the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the Central Government. Conceptually and essentially, if the nature of service provided is the same, natural corollary is that such service shall be taxed under the taxing statute. It nowhere culls out from the taxing statute that the same contemplated taxing those services where legal possession is handed over by the owner of the person renting the vehicle and where such de jure possession continue with the owner or person providing the service to the customer, such service is to be excluded. We also need to remind ourselves that concept of providing transportation service where de jure control remains with the owner or company of the vehicle and the driver and yet, it functions in accordance with the wish and desire of the person hiring such vehicle is extremely popular in India unlike the concept of person renting the cab desiring to drive himself by having all liabilities on himself. In absence of any specific exclusion in the statute of such service from the taxing net. large portion of such services cannot be held to be non inclusive by any artificial interpretation. Principle of contemporaneous exposition whereby yellow and black taxies are not subjected to se ..... X X X X Extracts X X X X X X X X Extracts X X X X
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