2021 (11) TMI 861 - AAR - GST

Classification of services - rate of GST - Input tax credit - Air Conditioned Stage Carriage - inward supply of services received from the suppliers who are in the same line of business - Sl.No.8 (ii)(b) and Sl.No.8(vi) of Notification No. 11/2017-Central Tax (Rates), dt 28-06-2017 - option of 12% (6% each towards CGST SGST) with no conditions attributed to it is applicable or not - HELD THAT - The service mentioned at Sl.No.8(ii)(b) is Air Conditioned Stage Carriage whereas the service mentioned at Sl.No.8(vi) is transport of passengers in any motor vehicle designed to carry passengers where the cost of fuel is included in the consideration charges from the service recipient. Evidently though both the entries deal with motor vehicles for carrying passengers, the entry at Sl.No.8(vi) is a general entry whereas the entry at Sl.No.8(ii)(b) is the specific entry, i.e., Air Conditioned Stage Carriage. And it is the principle of interpretation of statute that general things do not derogate from special things and therefore that special provision prevails over the general provision. As the applicant has stated that they will be in the business of passenger transport in Air conditioned buses as stage carriages, the applicable entry in view of the above discussions is Sl.No.8(ii)(b) of Notification No.11 of 2017, dt 28-06-2017 - Further they are liable to pay tax at the rate of 2.5% under CGST SGST respectively if they are not claiming any ITC on goods and services used in supplying service in the said entry. There is no exclusion of services from other taxable persons in the same line of business from this condition, as the entry clearly mentions that ITC should not be taken on Goods Service used in supplying the service . Therefore if they are recipient of services from other suppliers who are in the same line of business and would like to claim a lower rate of tax under Sl.No.8(ii)(b), they cannot claim the credit of input tax charged on services from these other suppliers of similar service - the entry Sl.No.8(vi) is not applicable to the nature of business of the applicant.

Summary

Issues:
1. Interpretation of GST rate for transportation of passengers in Telangana State by deploying Air Conditioned buses.
2. Clarification on input tax credit for services received in the same line of business.

Analysis:
1. The applicant sought clarification on the GST rate for their proposed business of transporting passengers in Telangana using Air Conditioned buses. The key questions raised were related to the applicability of specific entries in Notification No. 11/2017. The Authority analyzed the distinctions between Sl.No.8(ii)(b) and Sl.No.8(vi) of the notification to determine the correct tax rate. It was established that the service of "Air Conditioned Stage Carriage" falls under Sl.No.8(ii)(b), which mandates a 5% GST rate without input tax credit on goods and services. The ruling clarified that the applicant should pay tax at the rate of 2.5% under CGST & SGST if they do not claim input tax credit under this entry.

2. Regarding input tax credit for services received from suppliers in the same line of business, the ruling emphasized that if the applicant opts for the concessional 5% GST rate under Sl.No.8(ii)(b), they cannot claim input tax credit on any goods or services received, even from suppliers in a similar business line. The ruling highlighted the specific conditions and exclusions under the relevant entry to guide the applicant on their tax obligations. Additionally, the ruling determined that the alternative 12% GST rate with no specific conditions was not applicable to the applicant's business scenario.

Overall, the Advance Ruling Authority provided detailed explanations based on the provisions of the GST Act and specific notifications to address the applicant's queries effectively. The ruling clarified the applicable tax rates, input tax credit eligibility, and the importance of aligning business activities with the correct notification entries to ensure compliance with GST regulations.