GST applicable on Hiring of Non-AC Buses to Company for Transport of Staff: AAR [Read Order]

The Maharashtra Authority of Advance Ruling (AAR) ruled that GST is applicable on the hiring of Non-AC buses to Company for Transport of Staff.

The applicant, Shailesh Ramsunder Pande is a proprietor of  M/s Pooja Vaishnavi School Bus Services entered into a contract with M/s Ratan India Power Limited for the supply of NON AC Buses for transportation of their staff under contract carriage.

As the applicant is supplying Non AC Buses, whether GST is applicable for the same contract and applicability of “SI No. 15 Heading 9964 of Notification No. 12/2017 – Central Tax (Rate) dated June 28, 2017.

It is RIPL that controls the deployment of the buses. A perusal of the agreement reveals that the applicant shall deploy the buses (already inspected by RIPL) or as per instructions of the Admn. Dept of RIPL. Thus the applicant cannot run the buses on their own because the overall control of the buses is with RIPL. Further, as per the agreement, Insurance Charges, etc., will be paid by the applicant whereas toll tax, etc will be paid by RIPL. Thus while the ownership of the buses lies with the applicant, the buses shall be operated strictly as per the instructions of RIPL. Therefore in the subject case, there is a clear transfer of right to use the buses by way of effective control as is seen from the fact that the buses are plying strictly as per RIPL’s instructions.

The Coram of members Rajiv Magoo and T.R . Ramnani ruled that in the case of transportation of passengers, the recipient of service would be the passenger whereas in the case of renting any motor vehicle, like buses in the subject case, the recipient would not be the passenger. In the subject case, the consideration for the supply of service is charged from RIPL and not the passenger. Therefore in the subject case, it is clear that the recipient is RIPL. Hence, we have no hesitation in holding that the subject activity, amounts to ‘renting of a motor vehicle’ and shall qualify as a taxable activity under the provisions of the GST Laws. Since the subject activity is not ‘transportation of passengers’ as discussed, the provisions of notification no. 12/2017 Central Tax (Rate) dated 28.06.2017 is not applicable in the subject case.

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