Classification of Service — In the instant case, the applicant is seeking an advance ruling in respect of the following ISSUE—
Under which Chapter Heading / Service Code our activity will classify?
The applicant is providing Services to NMC by providing the Busses along with Driver, Fuel & Maintenance for use of General Public at Large.
According to applicant the same should classify under chapter heading 9966.
We find that the applicant is just hiring out these AC Buses to NMC and we also find that the effective control is with the applicant so far as the Buses are concerned which are provided to NMC. We also find the Bus Routes are decided by NMC as also the Bus Fares, which are collected from the passengers. Hence it is crystal clear that in the subject case the transaction would be of the nature of transfer of right to use any goods and the amounts received by them on kilometer basis would be considered as hiring charges.
In the subject case the applicant vide Service Provider Agreement entered into by them with NMC have transferred of right to use the goods i.e. AC Buses belonging to them. The said rights as per the agreement have been transferred to NMC for a period of 15 years from the commercial operations date (COD). COD in the agreement has been defined as the date on which period of 6 months are completed from the date of execution of the agreement.
It is very clear that in the subject case there is transfer of the right to use any goods (Buses) for any purpose i.e. for transportation purpose and for a specified period of 15 years for cash. Thus as per sub-clause (f) of clause 5 of Schedule II appended to both, the CGST Act, 2017 and the MGST Act, 2017 the subject activity of the applicant would be considered as Supply of Services.
We find that the applicant is rendering services to NMC by way of giving out on rent/hire, Buses which are further used by NMC for transportation of passengers. Such renting of Buses by the applicant squarely falls under Sr. No. 10, Heading No. 9966 sub- clause (ii) as rental Service of transport vehicles, in this case with operators and therefore attracts CGST and SGST @ 9% each on remuneration received for such services rendered by the applicant.
Ruling — The activity undertaken by the applicant in the subject case is supply of services and will be classified under Sl. No 10(ii), Heading 9966 of the Notification No 11/2017-Central Tax (Rate) dated 28th June 2017. — SST Sustainable Transport Solution India Private Limited, In Re... [2018] 5 TAXLOK.COM 028 (AAR-Maharashtra)