Clarifications by CBIC on various GST rate-related issues- Circular 177/09/2022
The CBIC issued Circular No. 177/09/2022 on 3rd August 2022 to clarify various issues relating to the applicability of GST & rates in relation to certain goods & services. Some of these clarifications have already been shared & discussed with you through various articles. You can refer to those articles at the links at the bottom of this article. In this article, we are only covering 3 issues on which the CBIC made clarification through the above circular as below:
GST on additional toll fees from vehicles not having fast-tag
Representations have been received by the CBIC from the stakeholders regarding the taxability of additional toll fees collected from the vehicles which are not having fast-tag. On this issue, the CBIC clarified as below:
- Entry 23 of Notification No.12/2017- Central Tax (Rate) dated 28th June 2017 exempts service by way of access to a road or a bridge on payment of toll charges.
- Ministry of Road Transport & Highways (MORTH) vide circular dated 16.02.2021 has directed to collect the additional amount from the users of the road to the extent of two times the fees applicable to that category of vehicle which is not having a valid functional Fast-tag.
- Essentially, the additional amount collected from the users of the road not having a functional Fast-tag, is in the nature of Toll Charges and should be treated as additional toll charges.
- On a similar issue of collection of overloading charges in the form of a higher toll (2/4/6/7 times the base rate of toll), it has already been clarified vide circular number 164/20/2021-GST dated 06.10.2021, which was issued on the basis of recommendation of GST Council that overloading charges at toll plazas would get the same treatment as given to toll charges.
- Therefore, it is clarified that additional fee collected in the form of higher toll charges from vehicles not having a Fast-tag is essentially payment of toll for allowing access to roads or bridges to such vehicles and may be given the same treatment as given to toll charges.
GST on tickets of private ferry used for passenger transportation
The CBIC received representations seeking clarification on the applicability of GST on private ferry tickets. It has been stated that these private ferries are used as means of transport from one island to another in the Andaman & Nicobar Islands. The CBIC clarified as below:
- As per Sl. No 17 (d) of Notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 “transportation of passengers by public transport, other than predominantly for tourism purpose, in a vessel between places located in India” are exempted.
- It is clarified that this exemption would apply to tickets purchased for transportation from one point to another irrespective of whether the ferry is owned or operated by a private sector enterprise or by a PSU/government.
- It is further clarified that, the expression ‘public transport’ used in the exemption notification only means that the transport should be open to the public.
- It can be privately or publicly owned. Only exclusion is on transportation which is predominantly for tourism, such as services which may combine with transportation, sightseeing, food and beverages, music, accommodation such as in shikara, cruise etc.
GST on the hiring of vehicles by firms for transportation of their employees to and from work
Representations have been received by the CBIC to clarify whether the engagement of non-air-conditioned contract carriages by firms for transportation of their employees to and from work is exempt under entry at Sr. No. 15(b) of notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. The CBIC clarified as below:
- Sr. No. 15 (b) of notification No. 12/2017- Central Tax (Rate) dated 28.06.2017 exempts “transport of passengers, with or without accompanied belongings, by non-air-conditioned contract carriage, other than radio taxi, for transport of passengers, excluding tourism, conducted tour, charter or hire.”
- It is clarified that ‘charter or hire’ excluded from the above exemption entry is charter or hire of a motor vehicle for a period of time, where the renter defines how and when the vehicles will be operated, determining schedules, routes, and other operational considerations.
- In other words, the said exemption would apply to passenger transportation services by non-air-conditioned contract carriages falling under Heading 9964 where according to explanatory notes, transportation takes place over a pre-determined routes on a pre-determined schedule. The exemption shall not be applicable where contract carriage is hired for a period of time, during which the contract carriage is at the disposal of the service recipient and the recipient is thus free to decide the manner of usage (route and schedule) subject to conditions of the agreement entered into with the service provider.
Read other CBIC clarifications:
https://www.taxwink.com/blog/gst-on-preferential-location-charges
https://www.taxwink.com/blog/gst-on-selling-advertisement-space-in-souvenirs
https://www.taxwink.com/blog/gst-on-sanitation-and-conservancy-services
https://www.taxwink.com/blog/rcm-on-renting-of-motor-vehicle-services
https://www.taxwink.com/blog/gst-on-sale-of-land
https://www.taxwink.com/blog/gst-on-admission-fee-or-entrance-fee
https://www.taxwink.com/blog/gst-on-icecream
