TMI Blog2021 (12) TMI 1036X X X X Extracts X X X X X X X X Extracts X X X X ..... e said case of M/s MP Enterprises Associates Limited. 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 NMMT and not the passenger. Therefore in the subject case it is clear that the recipient of service is NMMT. Hence, we have no hesitation in holding that the subject activity, amounts to 'renting of motor vehicle' and shall qualify as a taxable activity under the provisions of the GST Laws. Since the subject activity is taxable, the provisions of Notification No. 12/2017-CT (R) dated 28.06.2017 is not applicable in the subject case. The subject case is clearly covered by Entry Sr. No. 10 of Notification No. 11/2017-CT (Rate) dated 28.06.2017 as amended in as much as there is a Rental services of transport vehicles with or without operators and the activities of Renting of any motor vehicle/transport vehicle which is designed to carry passengers where the cost of fuel is included in the consideration charged from the service recipient are chargeable to eith ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he Applicant with principle place of business at Sector 20, c/o NMMT City Bus Depot, Turbhe, Navi Mumbai, Maharashtra, 400705, is registered under GST. 2.2 Applicant and Navi Mumbai Transport Undertaking ( NMMT ) have entered into an Operator Agreement dated 25.02.2020 vide which, Applicant shall be responsible to procure and supply air-conditioned electric buses to NMMT on gross contract basis to be plied on the routes identified by NMMT. During the term of the Agreement, ownership of the buses to be vested with the Applicant. 2.3 In-terms of the Agreement, the Applicant, as an Operator, will be responsible for operating and maintaining the buses by employing drivers and other staff necessary for the operation and maintenance of buses. Further, Applicant shall incur all expenses for operating the buses including expenses on repairs, maintenance, procurement of spare parts, charging of batteries etc. NMMT or a third party appointed by NMMT, shall collect appropriate fare from the passengers. 2.4 The scope of work required to be undertaken by the Company as an Operator under the Agreement is set out at Article 2 thereof. The obligations and entitlement of the Applicant unde ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3 of the Exemption Notification, Pure services (excluding works contract service or other composite supplies involving supply of any goods) provided to the Central Government, State Government or Union territory or local authority or a Governmental authority or a Government Entity by way of any activity in relation to any function entrusted to a Panchayat under article 243G of the Constitution or in relation to any function entrusted to a Municipality under article 243W of the Constitution is exempted. 2.10 NMMT is a Special Purpose Vehicle Company incorporated under the provisions of Companies Act, 1956 whose shares are held by the Novi Mumbai Municipal Corporation ( NMMC ) and further, it has been entrusted with the responsibility to provide City bus service in Navi Mumbai by the State Government of Maharashtra. Thus, NMMT qualifies as Government Entity. While NMMT qualifies as government entity, the activity of providing passenger transportation services does not fall under any of the functions entrusted to Municipality under Article 243W of the Constitution. Thus, the services provided by Applicant are not covered by Entry no. 3 of above Exemption Notification as the serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii) of the Rate Notification. Availability of input tax credit to the Applicant 2.14 Under Entry 10(i), as the services provided by the Applicant are taxable, the Applicant shall be eligible to avail the input tax credit of tax paid on the procurement of input supplies used for supplying services to NMMT, if the Applicant opts to pay tax at the rate of 12% under Entry 10(1). Further, even if the tax is payable under Entry 10(iii) at the rate of 18%, the Applicant shall be eligible to avail the input tax credit as there is no condition under the said Entry which restricts the eligibility to avail the input tax credit. APPLICANT'S SUBMISSION DATED 08.11.2021:- SERVICE PROVIDED BY THE APPLICANT IS IN THE NATURE OF RENTING OF MOTOR VEHICLE AND IS TAXABLE AT THE RATE OF 12% (WITH AVAILMENT OF CREDIT) 2.15 The service provided by the Applicant is covered under Serial No. 10(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 under Rate Notification as amended and is thus taxable at the rate prescribed against the said Entry. 2.16 The issue may also ar ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he rate of 12% (with input tax credit). 03. CONTENTION - AS PER THE CONCERNED OFFICER: The jurisdictional/concerned officer has not made any submissions in the matter. 04. HEARING 4.1 Preliminary e-hearing in the matter was held on 09.11.2021 The Authorized representative of the applicant, Shri. Pranav Pagariya, learned CA, Shri. Nishant Shah, learned advocate and Shri. Mayur Pawaskar, Manager were present. The Jurisdictional officer was absent. The Authorized Representatives made oral submission with respect to admission of their application. The Application was admitted on said date with certain directions to Applicant to produce details as to who provides the parking and the details as to who pays/bears electricity charges. Applicant was also directed to produce details i.e. agreement copies. 4.2 The matter was fixed for final hearing on 07.12.2021. The Authorized representative of the applicant, Shri Milan Soni, learned Advocate, Shri Sachin Jain, learned Advocate, Shri. Nishant Shah, learned advocate and Shri. Mayur Pawaskar, Manager were present. These Authorized Representatives, appeared made oral submission and reiterated contentions made in written s ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... not the passenger. Therefore, the recipient of service was BEST. Hence, the said activity, amounted to 'renting of motor vehicle' and qualified as a taxable activity under the provisions of the GST Laws and the case was clearly covered by Entry Sr. No. 10 of Notification No. 11/2017 - CT (Rate) dated 28.06.2017 in as much as there was a Rental services of transport vehicles with or without operators. 5.4 In the subject case, the applicant has entered into Operator Agreement dated 25 February 2020 with the Navi Mumbai Transport Undertaking ( NMMT ) as per which the following are also included : Applicant shall procure and supply air-conditioned electric buses to NMMT on gross contract basis to be plied on routes identified by NMMT; the ownership of the buses shall remain vested with the Applicant ; Applicant will be responsible for operating and maintaining the buses by employing drivers and other staff necessary for the operation and maintenance of buses ; Applicant shall be responsible for incurring all the expenses for operating the buses including expenses on repairs and maintenance, procurement of spare parts, charging of batteries etc. ; Applicant shall be paid an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the subject case since there is a Renting of motor vehicle/transport vehicle which is designed to carry passengers where the cost of fuel is included in the consideration charged from the service recipient i.e. NMMT, the applicant will have to pay GST @ 5%, if 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 (i.e. service procured from another service provider of transporting passengers in a motor vehicle or renting of a motor vehicle) has not been taken. If credit of input tax charged on goods and services used in supplying the service, is taken then the rate of output tax would be 12%. 5.3 Thus, the service of operating AC buses by the applicant for NMMT 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) wherein the applicant is eligible to claim set off, as discussed above, on its outwar ..... X X X X Extracts X X X X X X X X Extracts X X X X
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