Supply of Non-Air Conditioned Vehicles on Hire to Indian Army attracts IGST of 5%: AAR [Read Order]

Non-Air Conditioned Vehicles - Taxscan

The Rajasthan Authority of Advance Rulings in an application filed by M/s Pawanputra Travels held that contract for providing non-air conditioned vehicles on hire to the Indian Army attracts an IGST of 5% and is not covered by the exemption notification.

The applicant is under a contract for providing both air-conditioned and non-air conditioned vehicles on hire to the Indian Army and has raised invoices by charging GST on both of these types of GST. However, the Indian Army has not reimbursed them GST on the grounds that no GST is payable on non-air conditioned contract carriages and stand exempted under the notification.

The applicant contended that there is an exemption with respect to transportation of services by a non-air conditioned contract carriage and by referring to the definition of ‘contract carriage’ under Section 2(7) under the Motor Vehicles Act, 1988 stated that the service receiver is not covered under the said exemption but still is contending that they are covered by the exemption notification and no GST is payable.

The Authority comprising of Nitin Wapa and Hemant Jain after analyzing the materials relied upon by the applicant mentioned that the essential ingredient of a ‘contract carriage’ is that it piles 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. The bench further compared the meaning with the meanings of ‘rent-a-cab’, ‘radio-taxi’, ‘stage carriage’, ‘motor cab’ and ‘maxi cab’. ‘Rent a cab’ is “Taxi”, “Motor Vehicle” or “Vehicle” meaning any mechanically propelled vehicle adopted for use upon roads…

The bench concluded that the service provided by the applicant falls under the meaning of ‘rent a cab’ service and not ‘contract carriage’ since the service does not piles under a contract for a fixed set of passengers and allows any other passenger to board or alight from the carriage at will.

It was hence held that the contract for providing non-air conditioned vehicles on hire to the Indian Army attracts an IGST of 5% which is payable by the recipient.

Subscribe Taxscan Premium to view the Judgment
taxscan-loader