The issue involved in this case is that A.The applicability of a notification no. 12/2017 Central tax (Rate) dt.28.06.2017., issued under the provision of this Act; B. Determination of the liability to pay tax on any goods or services or both;

PJ/Case Study/2018-19/138

06 December 2018

M/s Pawanputra Travels, ADVANCE RULING NO.RAJ/AAR/2018-19/24 dated 02.11.2018
Prepared by CA Preksha Jain and Himanshu Bhimani

Introduction:-The compendious of the case is that , M/s PAWANPUTRA TRAVELS., having GSTIN registration number 08AAIFP7583M1ZE, (hereinafter referred to as the appellant) is providing both air conditioned and non- air-conditioned vehicles on hire to the Indian Army. The applicant has raised invoices on Indian Army by charging GST on all types of vehicles (air conditioned and non-air conditioned) supplied by them. However, the Indian Army has not reimbursed GST amount on non-air conditioned vehicles provided by them on the grounds that no GST is payable on non-air conditioned contact carriage as per serial no.15 of exemption notification no.12/2017-central tax (Rate) dt.28.06.2017. The applicant has also submitted a letter dt.31.05.2018 regarding return of invoices wherein GST has been charged by the applicant on non-air conditioned vehicles.

Relevant Legal Provisions:

Section 11 of the CGST Act,2017.
Notification no. 12/2017 Central tax (Rate) dt.28.06.2017.
Clause (7) of section 2 of the Motor Vehicles Act, 1988
Section 2(25) of Motor Vehicles Act, 1988
Section 2(22) of Motor Vehicles Act, 1988
Section 99 of CGST/RGST Act 2017.

Issue Involved:
The issue involved in this case is that

The applicability of a notification no. 12/2017 Central tax (Rate) dt.28.06.2017., issued under the provision of this Act;
Determination of the liability to pay tax on any goods or services or both;

Assessee’s Contention:

The applicant submits that there is exemption with respect to transportation of services by a non-air conditioned contract carriage vide serial no. 15 of the exemption notification no. 12/2017 Central Tax (Rate) dated 28.06.2017 which reads as follows:-

*S. No.*	*Chapter, Section, Heading, Group or Service Code (Tariff)*	*Description of Services*	*Rate (%)*	*Condition*
15	Heading 9964	*Transport of passengers, with or without accompanied belongings, by –* (a) air, embarking from or terminating in an airport located in the state of Arunachal Pradesh, Assam, Manipur, Meghalaya, Mizoram, Nagaland, Sikkim, or Tripura or at Bagdogra located in West Bengal; *(b) non-airconditioned contract carriage other than radio taxi, for transportation of passengers, excluding tourism, conducted tour, charter or hire; or* (c) stage carriage other than air-conditioned stage carriage.	Nil	Nil

It is pertinent to mention that it is provided that the meaning of ‘contract carriage’ will have the same meaning as assigned to it in clause (7) of section 2 of the Motor Vehicles Act, 1988 which states that-
“contract carriage” means a motor vehicle which carries a passenger or passengers for hire or reward and is engaged under a contract, whether expressed or implied, for the use of such vehicle as a whole for the carriage of passengers mentioned therein and entered into by a person with a holder of a permit in relation to such vehicle or any person authorized by him in this behalf on a fixed or an agreed rate or sum—
(a) on a time basis, whether or not with reference to any route or distance; or
(b) from one point to another, and in either case, without stopping to pick up or set down passengers not included in the contract anywhere during the journey, and includes—
(i) a maxicab; and
(ii) a motorcab notwithstanding the separate fares are charged for its passengers;
It is submitted that they neither satisfy the condition prescribed in clause (a) nor specified in clause (b) and accordingly, in their view, they cannot be considered as ‘non-air conditioned contract carriage’ eligible for exemption under the serial no. 15 of the exemption notification no. 12/2017 Central Tax (Rate) dated 28.06.2017. However, the service receiver in their case is contending that they are covered by the exemption notification and no GST is payable to the government. Therefore, the applicant request to kindly examine whether they are eligible for claiming the benefit of exemption contained at serial no. 15 of the exemption notification no. 12/2017 Central Tax (Rate) dated 28.06.2017 or not.

The applicant further submits that the amount of GST paid by them on the non air conditioned motor vehicles supplied to the Indian Army has not been reimbursed to them and the invoices raised by the applicant have been returned vide letter dated 31.05.2018. The applicant submits that it was mentioned in the letter dated 31.05.2018 that GST is not applicable on non air conditioned contract carriage and document issued by the Headquarters of Ministry of Defence (Army) was also provided to the applicant. The classification of vehicles as per DG OL & Motor Vehicle Act issued by the Headquarters of Ministry of Defence (Army) clearly mentions nil rate of GST on non air conditioned vehicles. Hence, the applicant requests to kindly pronounce decision as regards classification issued by the Headquarters of Ministry of Defence (Army) with respect to non air conditioned light motor vehicles supplied by them and the applicable rate of GST on such vehicles.
The applicant further submits that they have already paid GST on the supply of non-air conditioned motor vehicles supplied by them on hire to Indian Army but the service receiver is not reimbursing them the amount of GST on the grounds that the supply is covered by absolute exemption under serial no. 15 of the exemption notification no. 12/2017 Central Tax (Rate) dated 28.06.2017. In this regard, the applicant submits that GST is indirect taxation, the burden of which is to be borne by the recipient. It is also pertinent to mention that as per Explanation to section 11 of the CGST Act, 2017, in case where there is absolute exemption granted by the government, the registered person is not supposed to collect GST from the buyers/receivers. The said section is produced for the sake of convenient reference as follows:-

11. (1) Where the Government is satisfied that it is necessary in the public interest so to do, it may, on the recommendations of the Council, by notification, exempt generally, either absolutely or subject to such conditions as may be specified therein, goods or services or both of any specified description from the whole or any part of the tax leviable thereon with effect from such date as may be specified in such notification.
(2) Where the Government is satisfied that it is necessary in the public interest so to do, it may, on the recommendations of the Council, by special order in each case, under circumstances of an exceptional nature to be stated in such order, exempt from payment of tax any goods or services or both on which tax is leviable.
(3) The Government may, if it considers necessary or expedient so to do for the purpose of clarifying the scope or applicability of any notification issued under sub-section (1) or order issued under sub-section (2), insert an explanation in such notification or order, as the case may be, by notification
at any time within one year of issue of the notification under sub-section (1) or order under sub-section (2), and every such explanation shall have effect as if it had always been the part of the first such notification or order, as the case may be.
Explanation:-For the purposes of this section, where an exemption in respect of any goods or services or both from the whole or part of the tax leviable thereon has been granted absolutely, the registered person supplying such goods or services or both shall not collect the tax, in excess of the effective rate, on such supply of goods or services or both.
The applicant submits that the exemption under notification no. 12/2017 Central Tax (Rate) dated 28.06.2017 has been granted in exercise of the powers conferred under section 11(1) of the CGST Act, 2017 and so it is very important to ascertain the applicability of exemption notification in the present case as if the exemption is admissible in the present case, they cannot collect GST from their service receiver. Therefore, decision should be given as regards applicability of exemption notification in the present case so that the applicant is able to correctly determine its tax liability.

Reasoning adopted by the tribunal: - Theauthority contented that the applicant does not satisfy the condition as prescribed in clause (a) nor specified in clause (b) of clause (7) of section 2 of the motor Vehicles Act, 1988 as defined above.
Thus, the essential ingredient of a contract carriage is that it plies under a contract for a fixed set of passengers, and does not allow any other passenger to board or alight from the carriage at will. A ‘contract carriage’ carries passengers as a group and cannot pick up passengers en-route.
Even if the contract is assumed as ‘non-air-conditioned contract carriage’, even then, serial no.15 of the exemption notification no.12/2017 Central Tax(Rate) dt.28.06.2017 does not exempt it from GST, as specifically mentioned in the said notification.
It is hence concluded that the service provided by the applicant falls under ‘rent a cab’ service which attracts two rates i.e.

1. IGST @ 5% (CGST @ 2.5 % and SGST @ 2.5 %) without ITC credit.

2. IGST @ 12% (CGST @ 6 % and SGST @ 6 %) with ITC credit.

Conclusion
On the basis of above discussions it is now clear that the applicant can’t take the benefit of the notification no.12/2017-central tax (rate) dt.28.06.2017 as this service does not fall under ‘non-air conditioned contract carriage’ category. The service provided is ‘rent a cab’ which attracts IGST @ 5%(CGST @ 2.5% and SGST @ 2.5%) provided that credit of input tax charged on goods and services used in supplying the service, other than the input tax credit of input service in the same line of business (i.e. service procured from another service provider of transporting passengers in a motor vehicle or renting of a motor vehicle) has not been taken or IGST@12% (CGST@ 6% and SGST @ 6%) if input tax credit is availed.

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PJ/Case Study/2018-19/138
06 December 2018

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