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TMI Blog2019 (10) TMI 797X X X X Extracts X X X X X X X X Extracts X X X X ..... vice under the GST Act. The services provided by BMTC to the applicant are covered under SAC 996413 - Non Scheduled Local Bus and Coach Charter Services. The Services are provided by the BMTC to the applicant and the applicant collects the consideration of the bus passes plus the service charges and provides the same services. Coming to the services provided by the applicant to the actual passengers, the applicant is providing transportation services and the applicant is required to arrange alternate services to the commuters in Case BMTC ceases to provide the transport services wholly or in part - Further, the bills issued by the applicant are verified and found that the bills are issued to the Companies in the ITPB and not to the individual commuters. The applicant is valuing the service only to the extent of the additional amount charged as facilitation charges and collecting the balance amount as monthly pass amount and paying the taxes only to the extent of facilitation charges. The Commuters. or the Companies are not party to the contract between the applicant and BMTC and the applicant is providing the services after obtaining the same from BMTC. The contention of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... service, the Applicant has entered into a contract with Bangalore Metropolitan Transport Corporation (hereinafter referred to as BMTC ), BMTC is the sole public bus transport provider for Bengaluru, serving urban, sub-urban and rural areas and it provides people-centred services and commuter responsive service planning and promotion. In order to facilitate the service of transportation, the Applicant-receives the following types of bus passes from BMTC for distribution: - Non AC regular BMTC bus pass; and - Combo bus pass which Can be used for Non AC and AC buses (d) BMTC requires the Applicant to collect a minimum of 50 bus passes from them and for every 50 passes, BMTC would allot 1 bus to the Applicant. This would be in the nature of a chartered bus, which would provide transportation service between designated bus stops and ITPB. BMTC Charges tax on the bus passes sold by it to the Applicant, wherever applicable. (e) In the case of non-AC regular BMTC bus pass, BMTC does not charge GST since the same is covered in Entry No. 15 of Notification No. 12/2017 dated June 28,2017, Wherein the transportation of passengers in non-AC carriage under HSN code 9 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vices used in supplying the service has not been taken [Please refer to Explanation No. (iv.)] (g) It is submitted that the Applicant charges a separate fee in the form of facilitation fee for arranging this facility for the said commuters. This practice is followed for both Non-AC passes as well as Combo bus passes. (h) The Applicant charges a fee of ₹ 300 along with applicable GST at the rate of 18% per bus pass supplied to the commuters. Enclosed herewith is a sample invoice (refer Annexure 2 ) to demonstrate the tax on regular and AC buses and facilitation fee. (i) Additionally, the applicant also submits that monthly passes are provided as per the request of the -Applicant and the unused passes if any, are returned to BMTC. Thereafter on the basis of the actual number of passes utilized, BMTC raises a consolidated invoice. (j) The Applicant as a facilitator of the said service approaches BMTC in case of any deficiency in the provision of the services by BMTC as reported by the commuters. (k) From the above Submissions, it is evident that the Applicant is no way involved in rendering the service of transportation and instead, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Intermediary With respect to the Supply of bus pass on the bases of the definition of intermediary as per section 2(13) of the IGST Act, 2017, which is reproduced as follows: intermediary means a broker, an agent or any other person, by Whatever name called, who arranges or facilitates the supply of goods or services or both, or Securities, between two or more persons, but does not include a person who supplies such goods or services or both or securities on his own account . (c) On a perusal of the above definition, it is crystal clear that the applicant is an intermediary as it arranges the service of transportation by providing the bus passes to the commuters and does not provide transportation service on its own account. (d) It is further submitted that the definition of intermediary services was same under the erstwhile indirect regime as well, reference can also be drawn to the Education Guide issued by Central Board of Excise Customs with regard to Taxation of services, which provides the factors for determining a person as an intermediary. The relevant extract is as follows: In order to determine whether a person is acting intermediary or not, th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tain the passes. Relevant extract of the agreement is as follows: the second party is desirous of arranging for transport for the staff employed with it and by the various Corporate Clients of the International Tech Park Bangalore (ITPB) (staff of the tenants of the Park) from different parts of Bangalore City as mentioned in the Schedules, to and from ITPB, located at Whitefield Road, Bangalore 560066. The First party has agreed arrange the transport facility to the staff of tenants of the Park (the said purpose) subject to the terms and conditions (b) The Applicant Wishes to submit that bus passes are issued by BMTC only on the request, of the Applicant (depending on the demands raised by the commuters). Further, as mentioned earlier the unused passes are returned by the Applicant to BMTC, thereafter, BMTC issues invoices only for the actual passes utilized. This fact is also substantiated by clause 12 of the agreement which is reproduced as under: 12. Monthly passes Shan be provided as per request of the Second Party. The Second Party shall ensure that all unused passes for the month are returned to the First Party on or before the 10th of each month. The First ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ecipient of the supply and not included in the price actually paid or payable the goods or Services or both; (c) Incidental expenses, including Commission and packing, charged by the supplier to the recipient of a supply and any amount charged for anything done by the supplier in respect of the supply of goods or services or both at the time of, or before delivery of goods of supply of services; (d) Interest or late fee or penalty for delayed payment of arty consideration for any supply; arid (e) Subsidies directly linked to the price excluding subsidies provided by the Central Government and State Governments, Explanation , - For the purposes of this sub-section, the amount of subsidy shall be included in the value of supply of the supplier who receives the subsidy, (d) However, in the instant case, the value of bus pass is not covered under any clause of section 15(2) as stated above, the supply of bus pass being a supply for BMTC, will not be covered under clause (b) of the said Section. The Applicant is in the business or service or arranging transportation Service by Sourcing bus pass issued by BMTC to the commuters. (e) On the basis the above di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... buses for the said purpose at the rate of 1 bus for every 50 monthly bus passes taken by the applicant from BMTC. BMTC would send the bills to the applicant on or before the 10th days of the succeeding Calendar month calculated as per the applicable rate for each category of monthly passes demanded by BMTC. The bill amount Shall be paid on or before the 15 th of the Same month. . . In case the bills are not Settled together with interest within 1 month from the date the bills become due, the BMTC reserves the right to stop the service of the Chartered buses. (c) Monthly passes Shall be provided as per the request of the applicant and the applicant shall ensure that All unused passes for the month are returned to BMTC on or before the 10 th of each month. The BMTC shall prepare the bills after taking into account all the returned passes and only for the actual number of passes utilised by the applicant. (d) All commuters travelling in the buses engaged by the applicant shall possess identification cards and the monthly passes/ Casual passes Issued by the applicant, (e) When y bus does not turn up as scheduled, the BMTC shall be liable to pay ₹ 500-00 per defau ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces or both or securities on his own account. 5.10 To be covered under the definition of intermediary the applicant must facilitate the supply of services by the BMTC to the Commuters and in the pertinent case, it is the applicant who is receiving services from BMTC and providing services to the commuters and all are principal to principal in nature and the applicant is neither the agent of BMTC or the commuter. 6. Regarding the value of services, the total amount charged to the service recipient by the applicant would be the value of services supplied as per Section 15 of the CGST Act, 2017. Hence the value of the monthly passes issued plus the facilitation charges charged by the applicant and such other amounts which form the part of the Value of supply as specified in Section 15 Would be the Value of supply of the services provided by the applicant to the commuters. In view of the foregoing, we pass the following RULING 1. The Value of the bus passes distributed by the applicant to the Commuters and the facilitation charges is to be included in the value of services provided by the applicant. 2. Regarding the second question of whether the supply of s ..... X X X X Extracts X X X X X X X X Extracts X X X X
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