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2019 (9) TMI 989 - AAR - GSTApplicable rate of GST - sale of aircraft by an NSOP holder to a private company who have applied for NSOP license, to be used for purposes such as corporate leisure, pilgrimage, cargo chartered flights - HELD THAT - As can be seen from Serial No. 244 of Schedule I of Notification No. 1/2017-CT (Rate) dated 28.06.2017 is in respect of Other aircraft (for example, helicopters, aeroplanes), other than those for personal use, falling under Chapter 8802 of the GST Tariff and Serial No. 176 of Schedule IV of Notification No. 1/2017-CT (Rate) dated 28.06.2017 is in respect of Aircrafts for personal use, falling under Chapter 8802 of the GST Tariff. Since at this point of time, the intended use of the aircraft to be sold is not known and is only speculated as use, by the applicant, for non-personal purpose by the purchaser we will not be able to answer their question. However we are of the opinion that Serial No. 244 mentioned above will be applicable when the said aircraft will be for other than those for personal use and Serial No. 176 mentioned above will only be applicable if the said aircraft will be for personal use. Hence at this point of time it is not possible for us to answer their question due to lack of sufficient and conclusive information supplied by the applicant.
Issues Involved
1. Applicable GST rate on the sale of aircraft by an NSOP holder to a private company applying for an NSOP license. 2. Determination of whether the aircraft is for personal or commercial use. Detailed Analysis 1. Applicable GST Rate on Sale of Aircraft The primary issue is the applicable GST rate on the sale of an aircraft by a non-scheduled operators permit (NSOP) holder to a private company applying for an NSOP license. The applicant, engaged in construction and aviation chartering, intends to sell a pre-owned aircraft to a private company, K-Air, which has applied for an NSOP license. The applicant contends that the aircraft should attract a GST rate of 5% under Chapter heading 8802 2000, as it is not for personal use. The relevant notifications are: - Notification No. 1/2017-CT (Rate): Aircrafts other than those for personal use attract a GST rate of 5%. - Notification No. 2/2017-CT (Rate): Aircrafts for personal use attract a GST rate of 28%. 2. Determination of Personal vs. Commercial Use The applicant argues that the aircraft will be used for commercial purposes such as carrying passengers and medical evacuation, and not for personal use. They support their argument by referencing definitions and rules from the Civil Aviation Requirement (CAR) and Aircraft Rules, 1937, which distinguish between scheduled and non-scheduled operator services. - Non-Scheduled Operator Services: Defined as air transport services other than scheduled air transport services, including charter operations. - Scheduled Air Transport Service: Defined as services operated according to a published timetable or systematic series. - Personal Use: The applicant argues that personal use implies private use, which is distinct from commercial use. They cite various legal precedents to support their interpretation that "intended for use" should be considered, not just actual use. The applicant further contends that K-Air has applied for an NSOP license and received an initial NOC from the Ministry of Civil Aviation, which should indicate the aircraft's intended commercial use. Observations by the Authority The authority notes that the GST rate depends on the intended use of the aircraft: - 5% GST: Applicable if the aircraft is for commercial use. - 28% GST: Applicable if the aircraft is for personal use. The authority finds that the current evidence does not conclusively establish the intended use of the aircraft by K-Air. The initial NOC received by K-Air only enables them to apply for an NSOP license, and it is not sufficient to determine the aircraft's use definitively. Conclusion Due to the lack of conclusive evidence regarding the intended use of the aircraft, the authority is unable to provide a definitive ruling on the applicable GST rate. The determination of whether the aircraft will be used for personal or commercial purposes remains speculative at this stage. Order The authority refrains from answering the question due to insufficient and inconclusive information regarding the intended use of the aircraft. The applicable GST rate will depend on whether the aircraft is used for personal or commercial purposes, which cannot be determined at this time.
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