TMI Blog2021 (6) TMI 522X X X X Extracts X X X X X X X X Extracts X X X X ..... r Vehicle tax within Municipal Limit of Mumbai area will be paid by applicant whereas passenger tax, stage carriage permit, GST and toll tax will be paid by BEST. Whereas, the ownership of the buses lies with the applicant, BEST shall have the exclusive authority to determine routes and schedules and even the drivers shall be under the administrative control of BEST. There is transfer of right to use the buses to BEST by way of effective possession as well as effective control as is seen from the fact that the buses are plying as per directions and control of BEST and applicant is not free to use the said buses for any purpose other than complete dedication to BEST - In the case of transportation of passengers, the recipient of service would be the passenger whereas in the case of renting of any motor vehicle, the recipient would not be the passenger. In the subject case, the consideration for supply of service is charged from BEST and not the passenger. Therefore in the subject case it is clear that the recipient of service is BEST - the subject activity, amounts to renting of motor vehicle and shall qualify as a taxable activity under the provisions of the GST Laws. Since th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of Notification No.31/2017 dated 13.10.2017? (Amended Notification No.11/2017-CT(R) dated 28.06.2017). 3. Whether the service of operating mini AC buses by the applicant for BEST would be subject to GST @18% under Tariff Heading 9966 i.e. rental service of transport vehicles with or without operators under Notification No.11/2017-CT(R) dated 28.06.2017? At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression GST Act would mean CGST Act and MGST Act. 2. FACTS AND CONTENTION - AS PER THE APPLICANT FACTS: A Statement of relevant facts having a bearing on the question(s) raised 2.1 M.P. Enterprises Associates Limited, the applicant is as a supplier GSTIN, under the provisions of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as CGST Act, 2017). 2.2 Brihanmumbai Electric Su ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... which consideration is received. Since applicant has rented out its own buses to BEST, they are of the view that they are liable to pay GST on the said service charges/consideration received from BEST. The rate of tax applicable on the said supply would be @12% in terms of Notification No. 11/2017-CT(R) dated 28.06.2017 as amended by Notification No.31/2017-CT(R) dated 23.10.2017, in as much as the cost of fuel is included in the service charges paid to the applicant by BEST. However, BEST (service recipient) is of the view that 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 12 passengers ). B. Statement containing the Applicant s interpretation of Law and/or facts The following submissions are without prejudice to one another. 2.8 Applicant submits that the service of renting, operation and maintenance of air conditioned mini buses for BEST is a supply in terms of section 7 of the CGST Act, 2017 and consequently, would be liable to GST @12% in terms of Si. No. 10 of Notific ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ting of motor vehicle and qualify as a taxable activity @12% under Notification No.11/2017-CT(R) dated 28.06.2017 for the reasons explained infra. 2.13 The activity, in the instant case, would be renting and not hiring. In case of renting, there is a transfer of possession effective control to another person. ( State of AP V/s Rashtriya Ispat Nigam Limited 2002 89 AIR 1305 SC ). In the instant case, the effective control of the vehicle is with BEST in entirety. The passengers boarding the buses do not even know that the buses are owned and operated by the applicant. The primary activity of actual running of buses is carried out by BEST. This fact is conclusive evidence that the goods (buses) are under the effective possession, control and enjoyment of BEST. Thus, it is clear that the applicant has rented out these buses to BEST. 2.14 The above submission is supported by judgment dated 28.01.2011 of the Hon ble Andhra Pradesh High Court in G. S. Lamba and Sons V/s State of Andhra Pradesh. In that case the petitioner had supplied transit mixers (painted with Grasim Logo) to Grasim Industries Limited for transportation and delivery of Ready Mix Concrete (RMC). The m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the buses. Thus the activity, in the instant case, is not one of hiring but renting of the buses. 2.19 Hence, it is submitted that the service provided by the applicant is one of giving buses on rent to BEST. It will not amount to hiring. Residuary Entry 2.20. The second issue that needs consideration is one of rate of tax. GST Tariff Act, 2017 provides for three kinds of categories of renting under Tariff Heading 9966 as notified by Notification No.11/2017-CT(R) dated 28.06.2017 amended by Notification No. 31/ 2017-CT(R)dated 23.10.2017), namely- 1. Renting of any motor vehicle designed to carry passengers where the cost of fuel is included in the consideration charged from the service recipient, wherein the GST rate is 5% provided that no ITC is availed; 2. Renting of any motor vehicle designed to carry passengers where the cost of fuel is included in the consideration charged from the service recipient, wherein the GST rate is 12% with consequential benefit of input tax credit; 3. Rental services of transport vehicles with or without operators, other than (i) (ii) above. 2.23 On perusal of the above entries, it is seen that the activity of the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... g 9966. Hence, the activity will squarely fall under renting of any motor vehicle designed to carry passengers where the cost of fuel is included in the consideration charged from the service recipient at the rate of 12% in terms of amended Notification No.11/2017-CT(R). 03. CONTENTION - AS PER THE CONCERNED OFFICER: The jurisdictional officer has not made any submissions. 04. HEARING 4.1 Preliminary hearing in the matter was held on 09.03.2021. Shri. Mahesh Bhoite from applicant side and Shri. Bharat Raichandani, Advocate authorized representative of the applicant was present. Jurisdictional officer Shri. Prakash Kulkarni, Deputy Commissioner, PUN-VAT-E-612 was also present. The authorized representative made oral submissions and application was found proper. 4.2 The application was admitted and called for final hearing on 16.03.2019. Shri. Mahesh Bhoite, Shri. Rishabh Jain (C.A) from applicant side and Shri. Bharat Raichandani, Advocate authorized representative of the applicant was present. Jurisdictional officer Shri. Prakash Kulkarni, Deputy Commissioner, PUN-VAT-E-612 was also present. Jurisdictional Officer informed that written contention will b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... instant case, the applicant has an agreement with BEST for operation and maintenance of AC mini buses in Mumbai and suburban areas. The applicants owns buses, provides drivers and also incurs expenses on fuel and maintenance of the buses. For all these services provided by the applicant, BEST is paying them service charges on kilometer basis. 5.7 We also find that it is the BEST which controls the deployment of the fleets, the schedules and routes and also the applicant s drivers for operating these buses. A perusal of the agreement reveals that the applicant cannot run the buses on their own because the overall control of the buses is with BEST. Even the buses are required to be as per the specifications approved by BEST. 5.8 As per the agreement, Vehicle Registration Charges, Insurance premium for the Buses and other assets owned by the Operator and Motor Vehicle tax within Municipal Limit of Mumbai area will be paid by applicant whereas passenger tax, stage carriage permit, GST and toll tax will be paid by BEST. Whereas, the ownership of the buses lies with the applicant, BEST shall have the exclusive authority to determine routes and schedules and even the drivers shall ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... luded 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 has not been taken [Please refer to Explanation no. (iv)] (ii) Rental services of transport vehicles with or without operators, other than (i) above. 9 ---- In the subject case, there is a supply of rental services of transport vehicle where the operator (driver) is also supplied by the applicant to BEST. Hence such rental services of buses as in the subject case would attract 18% GST. However Notification No. 11/2017-CT (Rate) dated 28.06.2017 was amended by Notification No. 31/2017-CT (Rate) dated 13.10.2017 and as per the amendment the Sr No. 10 is as under:- SI.No. Chapter, Section or Heading Description of Service Rate (Per cent.) Conditions 10 Heading 9966 (Rental services of transport vehicles ( (i) Renting of any motor vehicle designed to carry passengers where ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rating mini AC buses by the applicant for Brihan Mumbai Electricity Supply Transport Undertaking (BEST) 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.1212017-CT(R) dated 28.06.2017 or not? Answer:- Answered in the negative. Question 2:- Whether the service of operating mini AC buses by the applicant for BEST would be subject to GST @ 12% under Tariff Heading 9966 i.e. renting of any motor vehicle designed to carry passengers where the cost of fuel is included in the consideration charged from the service recipient inserted by way of Notification No.31/2017 dated 13.10.2017? (Amended Notification No.11/ 2017-CT(R) dated 28.06.2017) Answer:- Answered in the affirmative. However GST @ 12% is chargeable only with effect from 13.10.2017. Question 3:- Whether the service of operating mini AC buses by the applicant for BEST would be subject to GST @18% under Tariff Heading 9966 i.e. rental service of transport vehicles with or without operators under Notification No.11/2017-CT(R) dated 28.0 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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