2020 (1) TMI 881 - AAR - GST

Benefit of exemption - supply of services by way of leasing of goods transport vehicles without operators to GTA - classification of services - rate of tax - input tax credit - serial no. 22 (b) of Notification no 12/2017 CT(Rate) dated 28/06/2017 (corresponding State Notification No. 1136 - FT dated 28/06/2017) - HELD THAT - The Applicant intends to lease out vehicles like trucks, tankers etc. that are designed to transport goods. The control and possession of the vehicle will be transferred to the lessee, who will engage operator and bear the cost of repair, insurance etc. It is, therefore, not classifiable under SAC 9966, which is restricted to rental services of transport vehicles with operator. Classification of service - HELD THAT - The service is classifiable under SAC 997311 as leasing or rental services concerning transport equipment without operator. It amounts to the transfer of the right to use the goods and taxable under Sl No. 17(iii) of the Rate Notification. Input tax credit - HELD THAT - Section 17(5)(a) of the GST Act does not allow input tax credit on inward supply of motor vehicles of a specific category (those meant for transportation of persons having seating capacity not exceeding thirteen persons). The restriction, therefore, does not apply to the goods transport vehicles. SI No. 17(iii) of the Rate Notification does not prohibit claiming input tax credit on the goods given on lease.

Summary

Issues:
1. Admissibility of the Application
2. Submission of the Applicant
3. Submission of the Revenue
4. Observations & Findings of the Authority

Admissibility of the Application:
The Applicant sought a ruling on the exemption of services by leasing goods transport vehicles without operators to goods transport agencies. The questions raised were deemed admissible under section 97(2)(a)(b)&(d) of the GST Act as they were not pending in any proceedings. The application was admitted based on this assessment.

Submission of the Applicant:
The Applicant argued that leasing out vehicles without operators, where control and possession are transferred to the lessee, differs from simply giving vehicles on hire. They referenced a judgment to support their position, emphasizing the distinction between hiring and renting. The Applicant contended that their service falls under a different category than rental services with operators and should be classified accordingly.

Submission of the Revenue:
The revenue officer did not provide any comments on the matter.

Observations & Findings of the Authority:
The Authority analyzed the nature of hiring, highlighting the transfer of the right to use goods in such transactions. They determined that the Applicant's service of leasing goods transport vehicles without operators falls under a specific provision in the Rate Notification and is taxable accordingly. The Authority classified the service under a specific SAC and ruled that the Applicant can claim input tax credit on the leased vehicles.

In conclusion, the Authority classified the Applicant's service of leasing goods transport vehicles under a specific SAC and ruled it as taxable under the relevant notification. The Applicant was also allowed to claim input tax credit on the leased vehicles.