The Karnataka Authority of Advance Ruling (AAR) ruled that renting e-bikes and bicycles without an operator can not be taxed at the rate of 5% and 12% respectively.
The Applicant, Yulu Bikes Pvt. Ltd. is engaged in renting vehicles like e-bikes (Miracle), bicycles (Move) in Bengaluru, Karnataka through a technology-driven mobility platform. They enter into a contract/agreement with the customers with regard to usage or renting of the e-bikes (Miracle), bicycles (Move), and charge based on the Advent of usage of such vehicles.
The applicant sought the advance ruling on the issue of whether the renting of e-bikes (Miracle), bicycles (Move) without operator can be classified under the SAC 9973-Leasing or rental services without operator Sl.No.17 (viia) of Notification No.11/2017 Central Tax (Rate) dated 28th June-2017 as amended.
In the Miracle scheme the mobility is provided through a smart dockless electrical vehicle powered by state-of-the-art IoT technology. The vehicle is LightWeight, lighter than a scooter, faster than a bicycle then 18% GST was discharged.
In the Move scheme, the mobility is provided 18% through a smart lock enabled bicycle Powered by GPS, GPRS, and Bluetooth technologies, then 18% GST was discharged.
The Heading 9966 reads as Rental Services of transport vehicles with or without operators. Heading 9973 reads as Leasing or rental services with or without an operator and includes rental or operational leasing of machinery and equipment, personal and household goods, but does not include leasing services of machinery and equipment of personal and household goods on a purely financial serv basis her subheadings of 9973 pertain to other goods, IPR, etc with no mention of transport goods/vehicle.
“Thus, the applicant’s services are squarely covered under SAC 9966. The specific description is preferred to the general one as per the Explanatory Notes and hence we conclude that the applicant’s activity is classifiable under Heading 9966,” the AAR observed.
The Authority of Advance Ruling consisting of Dr. M.P. Ravi Prasad and Mashood ur Rehman Farooqui ruled that renting of e-bikes/bicycles without operator cannot be classified under SAC 9973, Leasing or rental services without operator and Sl.no. 17(viia) of Notification no. 11/2017 CT/R) dated 28th June 2017 as amended is not applicable to the instant case.
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