GST on Passenger Transportation by Road

Travel by Stage /Contract Carriage/Motor Cab/Radio Taxi

As per Para 2(zzh) of NN 12/2017-CTR, (zzh) “stage carriage” shall have the same meaning as assigned to it in clause (40) of section 2 of the Motor Vehicles Act, 1988 (59 of 1988); i.e.

Stage carriage means a motor vehicle constructed or adapted to carry more than six passengers excluding the driver for hire or reward at separate fares paid by or for individual passengers, either for the whole journey or for stages of the journey

[It means stage carriage refers to motor vehicle constructed or adapted to carry more than 6+driver=7 passenger i.e. 8 or more seats]

 

As per Para 2(t) of NN 12/2017-CTR (t) “contract carriage” has the same meaning as assigned to it in clause (7) of section 2 of the Motor Vehicles Act, 1988 (59 of 1988)

“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  authorised  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  that  separate  fares  are  charged  for  its  passengers;

 

Bhim Singh vs State Of Uttarakhand & Others on 24 February, 2014]

• Difference between the stage carriage and the contract carriage, as per the Motor Vehicles Act, is that a stage carriage permit holder picks passengers from one point and there can be various stages till the final destination point which are various stages, that is why its is called a ‘stage carriage’. On the other hand, a contract carriage permit holder runs from one point to the destination point only.

 

• Motor Cabis defined as any motor vehicle constructed or adapted to carry not more than six passengers excluding the driver for hire or reward,
• As per section 2(22) of Motor Vehicle Act 1988, “maxicab” means any motor vehicle constructed or adapted to carry more than six passengers, but not more than twelve passengers, excluding the driver, for hire or reward

[Hence maxi cab shall have 8 to 13 seats including driver ]

 

• As per Para 2(zv) of 12/2017-CTR, “radio taxi” means a taxi including a radio cab, by whatever name called, which is in two-way radio communication with a central control office and is enabled for tracking using the Global Positioning System (GPS) or General Packet Radio Service(GPRS)

 

 

Travel by Stage /Contract Carriage/Radio Taxi[Sl No. 8(ii) of NN 11/2017-CTR]

Contract Carriage

(a)  Transport of passengers, with or without accompanied belongings by-

air conditioned contract carriage other than motorcab; [Maxi cab not excluded] Is taxable @ 5%, Provided that credit of input tax charged on goods or services used in supplying the service has not been taken

 

Exemption : As per Sl No. 15(b) of NN 12/2017, Transport of passengers, with or without accompanied belongings by  non-airconditioned contract carriage  other than radio taxi, for transportation of passengers, excluding tourism, conducted tour, charter or hire is NIL Rated

 

Stage Carriage

(b) Transport of passengers, with or without accompanied belongings by-air conditioned stage carriage; Is taxable @ 5%, Provided that credit of input tax charged on goods or services used in supplying the service has not been taken

Exemption :As per Sl No. 15(c) of NN 12/2017, stage carriage other than air conditioned stage carriage is exempted.

 

Radio Taxi

(c)Transport of passengers, with or without accompanied belongings by  radio taxi Is taxable @ 5%, Provided that credit of input tax charged on goods or services used in supplying the service has not been taken

[Note : Non AC radio taxi is also taxable]

 

Explanation.- (a) “contract carriage” has the meaning assigned to it in clause (7) of section 2 of the Motor Vehicles Act, 1988 (59 of 1988); (b) “stage carriage” has the meaning assigned to it in clause (40) of section 2 of the Motor Vehicles Act, 1988 (59 of 1988)

 

Travel by Motor cab [Sl No. 8(vi) of NN 11/2017-CTR]

1. Transportation by Motor Cab Where Cost of Fuel is included in the consideration charged
2. a) Where ITC on goods and services is not taken

Transport of passengers by motor cab where the cost of fuel is included in the consideration charged from the service recipient is also taxable @ 5%.

Provided that credit of input tax charged on goods and services used  in supplying the service has not been taken

 

 

[Note: In contrast to Sl No. 8(ii) where credit of goods “or” services is denied, at Sl No. 8(vi) credit of goods “and“ services is denied.]

 

1. b) Where ITC on goods or service is taken

If the person providing motor cab services avails input tax credit on goods or services, the tax rate applicable shall be 12%.

[As per NN 20/2017 dtd 22/08/2017]

 

2. Transportation by Motor Cab Where Cost of Fuel is not included in the consideration charged

As per NN 11/2017 the motor cab service where cost of fuel is not included in the consideration charged is covered by residual entry Sl No. 8(vii) and hence taxable @ 18%. There is, however  no restriction for availing ITC

Exemption from travel by road by cab

As per Sl No. 17 of NN 12/2017-CTR , Service of transportation of passengers, with or without accompanied belongings, by—

metered cabs or auto rickshaws (including e-rickshaws) is Nil Rates

As per Para 2(zp) of NN 12/2017-CTR, “metered cab” means any contract carriage on which an automatic device, of the type and make approved under the relevant rules by the State Transport Authority, is fitted which indicates reading of the fare chargeable at any moment and that is charged accordingly under the conditions of its permit issued under the Motor Vehicles Act, 1988 (59 of 1988) and the rules made thereunder (but does not include radio taxi);

 

Note: Travel by auto rickshaw has been exempted but hand driven rickshaw has not been exempted. Hence if services of hand driven rickshaw are taken, tax may be payable on reverse charge by registered person.

 

Renting of Motor Cab [Heading 9966]

Note: Renting of Motor cab can be distinguished from service by transportation of motor cab by the only feature that while driver is provided for service by transportation by motor can along with motor cab, renting shall not involve driver.

1. Where Cost of Fuel is included in the consideration charged [Sl No 10(i) of NN 11/2017-CTR]

Renting of motorcab where the cost of fuel is included in the consideration charged from the service recipient is taxable @ 5% subject to condition that credit of input tax charged on goods and services used  in supplying the service has not been taken

 

As per NN 20/2017 dtd 22-08-2017, where ITC on goods or service is availed Renting of motorcab where the cost of fuel is included in the consideration charged from the service recipient is taxable @ 12%

 

2. Where Cost of Fuel is not included in the consideration charged [Sl No. 10(ii) of NN 11/2017-CTR]

Rental services of transport vehicles with or without operators, other than 10(i) is taxable @ 18%. There is, however  no restriction for availing ITC

 

Issue of Availability of Input Tax Credit

Where credit is not available

It can be seen from that in case of passenger transport by road Input tax credit on goods and services is not available in case of

1. a) Travel by Contract carriage other than motor cab
2. b) Travel by Stage carriage
3. c) Travel by Radio Taxi
4. d) Travel by Motor Cab where cost of fuel is included in consideration and tax rate of 5% is availed instead of 12%

Further as per Explanation 4(iv) to NN 11/2017

Wherever a rate has been prescribed in this notification subject to the condition that credit of input tax charged on goods or services used in supplying the service has not been taken, it shall mean that,-

1. a) credit of input tax charged on goods or services used exclusively in supplying such service has not been taken; and
2. b) credit of input tax charged on goods or services used partly for supplying such service and partly for effecting other supplies eligible for input tax credits, is reversed as if supply of such service is an exempt supply and attracts provisions of sub-section (2) of section 17 of the Central Goods and Services Tax Act, 2017 and the rules made thereunder.

Where credit is available

As per section 17(5)(a)(A) and (B), Input tax credit is available in respect of motor vehicles and other conveyances used for

(A) further supply of such vehicles or conveyances

(B) transportation of passengers

 

 

 

 

 

 

 

However ITC on motor cab is available in following cases:

1)    Where cost of fuel is not included in consideration charged and hence 18% rate is applied

2)    Where cost of fuel is included in consideration and tax rate of 12% is applied instead of 5%

 

Since capital goods are also goods, a pertinent issue to be addressed is whether ITC shall be available on motor cab used for providing transportation of passenger or renting service of

 

 

Place of Supply in case of passenger transportation service

Where location of supplier and recipient is in India

As per section 12(9) The place of supply of passenger transportation service to,— (a) a registered person, shall be the location of such person;

(b) a person other than a registered person, shall be the place where the passenger embarks on the conveyance for a continuous journey:

Provided that where the right to passage is given for future use and the point of embarkation is not known at the time of issue of right to passage, the place of supply of such service shall be determined in accordance with the provisions of sub-section (2).

Explanation.––For the purposes of this sub-section, the return journey shall be treated as a separate journey, even if the right to passage for onward and return journey is issued at the same time.

 

Where location of supplier or recipient is not in India

As per section 13(10) The place of supply in respect of passenger transportation services shall be the place where the passenger embarks on the conveyance for a continuous journey.

 

Location of Supplier	Location of Recipient	Status of Recipient	Place of embarking	Place of Supply	Export/Import
Outside India	Outside India	Registered/Unregd	Outside India	Outside India	No
		Registered/Unregd	Inside India	In side India	No
	In India	Registered	Outside India	Outside India	No
		Unregistered	Outside India	Outside India	NO
		Registered	In India	In India	Import
		Uregistered	In India	In India	Import [but then unregistered person to get registered u/s 24(i)]
In India	Outside India	Registered/Unregd	Outside India	Outside India	Export of Service, if payment received in CFE
		Registered/Unregd	In India	Place of Embark in India	No
	In India	Registered	Outside India	Location of recipient in India	No
		Unregistered	Outside India	Outside India	No
		Registered	In India	Location of recipient in India	No
		Unregistered	In India	Place of Embark in India	No

 

Place of Supply in case of hiring of means of transport

As per section 13(9) (c)Where location of supplier or recipient is outside India, Place of Supply in case of Hiring of means of transport up to one month including yatches but excluding aircrafts and vessels is location of supplier

 

However where location of supplier and recipient is in India , section 12(2) shall apply and place of supply shall be the location of recipient in case of B2B transaction or location of supplier in case of B2C transaction or location of recipient where address on record exists even in case of B2C transactions.

Passenger transportation by road Service provided through E-Commerce Operator

Intra State Supplies

As per NN 17/2017-CTR read with section 9(5) of CGST in case of services by way of  transportation of passengers by a radio-taxi, motorcab, maxicab and motor cycle tax on intra state supplies shall be paid by E-Commerce Operator except where aggregate turnover of supplier crosses 20 lacs and is therefore required to obtain registration u/s 22(1) CGST Act.

Note: It means that where supplies of service by radio-taxi, motorcab, maxicab and motor cycle exceed Rs. 20 lacs, tax shall be paid by operator even in respect of supplies through E-Commerce Operator.

How CGST and SGST shall be paid by Electronic Commerce Operator in the states where he does not have presence?

As per first proviso to Section 9(5), where an electronic commerce operator does not have a physical presence in the taxable territory, any person representing such electronic commerce operator for any purpose in the taxable territory shall be liable to pay tax.

As per 2^nd Proviso to section 9(5), where an electronic commerce operator does not have a physical presence in the taxable territory and also he does not have a representative in the said territory, such electronic commerce operator shall appoint a person in the taxable territory for the purpose of paying tax and such person shall be liable to pay tax

 

Inter state supplies

Similar Notification has been issued under IGST Act as NN 14/2017-ITR and imposes obligation on e-commerce operator to pay tax in case of inter state supply

How IGST shall be paid by Electronic Commerce Operator in the where he does not have presence in taxable territory i.e. India?

As per first proviso to section 5(5), where an electronic commerce operator does not have a physical presence in the taxable territory, any person representing such electronic commerce operator for any purpose in the taxable territory shall be liable to pay tax

As per 2^nd proviso to section 5(5), where an electronic commerce operator does not have a physical presence in the taxable territory and also does not have a representative in the said territory, such electronic commerce operator shall appoint a person in the taxable territory for the purpose of paying tax and such person shall be liable to pay tax.

 

Passenger Transportation by Boat or Vessel

As per residual clause 8(vii) of NN 11/2017-CTR transportation by boat, vessel or ship is taxable @ 18%.

As per Sl No.17 of  12/2017-CTR, Service of transportation of passengers, with or without accompanied belongings, by—

(c) inland waterways;

(d) public transport, other than predominantly for tourism purpose, in a vessel between places located in India;

Is NIL rated

Hence transportation predominantly for tourism is taxable @ 18%.

As per para 2(zi) of 12/2017-CTR “inland waterway” means national waterways as defined in clause (h) of section 2 of the Inland Waterways Authority of India Act, 1985 (82 of 1985) or other waterway on any inland water, as defined in clause (b) of section 2 of the Inland Vessels Act, 1917 (1 of 1917);