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TMI Blog2022 (7) TMI 1100X X X X Extracts X X X X X X X X Extracts X X X X ..... a reference to such a similar provision under the CGST or MP GST Act would be mentioned as being under the GST Act. BRIEF FACTS OF THE CASE AND SUBMISSION OF THE APPLICANTS IN THEIR APPLICATION IS AS UNDER - 3.1. The Applicant seeking advance ruling regarding the taxability of the said services & input to be taken on buses and repairs and Maintenance Expenses as same is allotted with the work through Tender Process. 3.2. The Service Recipient companies BCLL, AICTSL, and JCTSL is State Govt. Company. 3.3. The Service Recipient companies will be paying the service provider on the total effective run kilometre. 3.4. Applicant is providing non AC buses with Drive, Fuel, Repairs and Maintenance of buses. 3.5. Route of the buses & the applicable fare will be decided by service Recipient and provide the transportation services to passenger. 4. QUESTION RAISED BEFORE THE AUTHORITY - The Applicant has submitted application u/s 97(1] of CGST Act & MP GST Act seeking Advance Ruling on the following questions;- I] whether tax is applicable on supply of services to BCLL, AICTSL, JCTSL (State Government Co.) Il) Rate of Tax if the same is taxable III) Admissibility of Input 5. DE ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ntain line of passenger's coaches and other vehicles generally to transport passengers and to purchase, charter, hire build and otherwise acquire passenger coaches and buses to let out, hire or charter or otherwise deal with and dispose off any such coaches and buses. As per RFP the object of the Tender The actions seek to promote the Organized Public Transport, reduce the use of private vehicles and to develop a mass transport of passenger service in city. The Public Transport System in city is being developed and implemented through a Special Purpose Vehicle (SPV), as a strategy for solving the mobility problems of the city under the perspective of prioritizing the mass public transport system as opposed to individual I unorganized transport systems in order to structure an integrated transport system which offers higher safety, quality, security and reliability from users of Public Transport Corridors with the highest passenger demand in city. SPV shall ensure operation on business lines with "Good Industry Practice" using a Public Private Partnership model, providing acceptable quality services to maximum number of people at scheduled prices on a sustainable basis. While ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... by BCLL in a day, it will not be counted as a day for the purpose of reckoning the number of days operated in a month. iii. In case of cancellation of kilometers trips for any reason payment shall be made for actual km operated. iv. Bus Kilometers shall not constitute the following: 1. Any kilometres travelled by the Contracted Bus to a maintenance facility set up by the Operator at the Bus Depot/Parking Space provided by BCLL or for any travel not authorized by BCLL. 2. Distance travelled by a Contracted Bus to fuelling facility set up by the Operator at the Bus Depot/Parking Space provided for by BCLL. 3. Kilometres from the point of the breakdown to the destination point in case of break down wherein BCLL can divert the passengers to any other hired bus of BCLL. v. Increase in route kilometre due to enforcement of law and order shall not be reckoned for hire charges where BCLL has not changed its fare structure. vi. Operator is free to keep spare diesel buses for smooth running of contracted Diesel Buses. The Operator shall at all times during the contract period maintain 96% of the buses every day excluding 2 days in a month for maintenance. If it fails to provide, a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... m GST under notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. SI.No . 22 of this notification exempts "services by way of giving on hire (a) to a state transport undertaking, a motor vehicle meant to carry more than twelve passengers: or (aa) to a local authority, an Electrically Operate vehicle meant to carry more than twelve passengers". 6.6.2 This issue has arisen in the wake of ruling issued by an Authority for Advance Ruling that the entry al SI. No. 22 of notification No. 12/2017-Central Tax (Rale) exempts services by way of giving on hire vehicles to a State Transport Undertaking or a local authority and not renting of vehicles to them. The ruling referred to certain case laws pertaining to erstwhile positive list based service tax regime. 6.6.3 It is relevant to note in this context that Schedule II of CGST Act. 2017 declares supply of any goods without transfer of title as supply of service even if right to use is transferred. Transfer of right to use has been declared as a supply of service [Schedule II, Entry 5(f) refers] 6.6.4 The issue was placed before the 45 GST Council Meeting held on 17.09.2021. As recommended by the GST Council, it is clarified tha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and taxability of outward supply which are covered u/s 97(2)(b). 97(2)(d) and 97(2)(e) respectively. Therefore, the application is admissible. 7.6 The applicant has furnished the following documents in evidence of the scope of the work being done and to establish the nature of the supply of service being made by the applicant:- - NIT NO. 458 AICTSL/Transport/Jan-2020/1st Call for selection of Bus Operators for Intra City Bus service in Indore City on Procure. Operate and Maintain Basis": - Agreement with Atal Indore City Transport Services Limited dated 14.01.2021; - Agreement with Bhopal City Link Limited dated 12.11.2020; - Agreement with Jabalpur City Transport Services Limited dated 12.11.2020; - Memorandum and Articles of Association of Bhopal City Link Limited: - Letter dated 29.10.2021 from Jabalpur City Transport Services Limited regarding its constitution; - Letter dated 28.10.2021 from Bhopal City Link Limited regarding its constitution; and - Letter dated 24.01.2022 from Atal Indore City 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... upplied) b) 12/2017 -Central Tax : 22 Heading 9966 or Heading 9973 Services by way of giving on hire - (a) to a stale transport undertaking, a motor vehicle meant to carry more than twelve passengers; or (aa) to a local authority, an Electrically operated vehicle meant to carry more than twelve passengers; or Explanation. - For the purposes of this entry. "Electrically operated vehicle" means vehicle falling under Chapter 87 in the First Schedule to the Customs Tariff Act, 1975 (5 1 of 1975) which is run solely on electrical energy derived from an external source or from one or more electrical batteries fitted to such road vehicle.'. (b) to a goods transport agency, a means of transportation of goods. (c) motor vehicle 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re but. it is not acceptable to uphold that wherever de jure control and possession of the vehicle stands transferred in law from the owner to the person on renting/hiring the service that the service lax is leviable and this is. of course, not different than services rendered on a contractual basis, providing transport service for fixed amount of periodical return or fare. We need not be oblivious of the fact that for the purpose of regulating the business of renting of motor cabs or motor cycles to persons who are desirous of driving by themselves or through drivers, either for their own use or for any matters connected herewith, the scheme is made by 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 7.17 Our view is further supplemented by para 8 of Board Circular No. 164/20/2021 GST dated 06.10.2021. 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. 7.18 Once the supply is exempt, the question relating to rate of tax and admissibility of input Tax credit is redundant. 8. Ruling 8.1 On a joint reading of the terms of the agreement, high court rulings, para 8 Board Circular No. 164/20/2021 - GST dated 06.10.2021. Entry No. 10 of Notification No. 11/2017 - Central Tax (Rale) and Entry No. 22 of Notification No. 12/2017-Central Tax (Rate) it appears that supply covered under the agreement entered into by the applicant with AICTSL. BCLL. JCTSL. which are state government companies as per ROCs submitted by the applicant, is covered under ..... X X X X Extracts X X X X X X X X Extracts X X X X
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