Name of the Applicant:

Shailesh Ramsunder Pande

Appeal No.:

GST-ARA-66/2019-20/B-49

Ruling pronounced by:

GST AAR Maharashtra

Date of Ruling

20-08-2021

The applicant entered in contract with M/s Ratan India Power Limited for supply of non-AC buses for transportation of their staff under contract carriage. The contention of the applicant is that the services rendered by him is exempted under GST as it falls under Sr. No. 15 of Chapter Heading 9964 of the Notification No. 12/2017- Central Tax (Rate) dated 28-06-2017 as follows:

“Transport of passengers, with or without accompanied belongings, by-

(b) Non-air-conditioned contract carriage other than radio taxi, for transportation of passengers, excluding tourism, conducted tour, charter or hire;”

As per the copy of service order, the said contract has a subject heading “Deployment of staff buses for transport of staff under contract carriage”. It is clear that the said contract carriage is ‘Hire Contract’ for staff. Also, the supplier has raised tax invoice with description of service as “HIRING of VEHICLE”.

Reference was also made to advance ruling passed by Rajasthan Authority for Advance Ruling in case of Pawanputra Travels vide Advance Ruling No. Raj/AAR/2018-19/24 dated 02/11/2018 where advance ruling was sought on the similar issue. It was held that:

“A contract carriage carries passengers as a group and cannot pick up passengers en-route. It is hence concluded that the service provided by the applicant falls under “Rent a cab” service which attracts GST @ 5% provided that input tax credit 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 OR GST @12% if input tax credit is to be availed. Therefore, it is ruled that:

The service provided by the applicant is not exempted as this service does not fall under ‘non-air-conditioned contract carriage’ category. The service is a ‘rent a cab service’, which attracts GST @ 5% (ITC not available) or @ 12% (ITC available).”

From reading of the service order, it is seen that the order is for hire of 27-seater and 32-seater non-AC buses for transportation of staff. The scope of work includes deployment of staff buses to transport staff under contract carriage on monthly hire basis. The applicant incurs expenses on fuel and maintenance of the buses and for all these services provided by the applicant, they are paid fixed hire cost plus fixed fuel cost at predetermined rates of fuel plus mileage. The buses shall operate strictly as per the instructions of the service receiver; thus, the deployment of buses shall be under strict control of the RIPL (service receiver).

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 like buses in the subject case, the recipient would not be the passenger. In this case, the consideration for supply of services is charged from RIPL and not the passenger. Therefore, in the instant case, it is clear that the recipient is RIPL. Hence, we have no hesitation in holding that the subject activity amounts to ‘renting of motor vehicle’ and shall qualify as a taxable service under GST.

The essential ingredient of a contract carriage is that it plies under a contract for a fixed set of passengers, and does not allow any other passenger to board or alight from the carriage at will. ‘A contract carriage’ carries passengers as a group and cannot pick passengers en-route. The applicant does not satisfy the condition prescribed in clause (a) nor specified in clause (b) of clause (7) of section 2 of Motor Vehicles Act, 1988 and accordingly, they cannot be considered as ‘non-airconditioned contract carriage’ and hence not eligible for exemption under sr. no. 15 of the exemption notification no. 12/2017 Central Tax (Rate) dated 28.06.2017.

Even if the contract is assumed as ‘non-airconditioned contract carriage’, serial no. 15 of the exemption notification no. 12/2017 Central Tax (Rate) dated 28.06.2017 does not exempt it from GST, as the “hired” non-airconditioned contract carriage are excluded from exemption as specifically mentioned in the said notification.