The Odisha Bench of Appellate Authority of Advance Ruling (AAAR) has held that leasing of e-bikes without an operator is taxable as financial/related service at GST rate applicable to ‘like goods’.
The bench of M.S. Reddy and Yamini Sarangi has observed that leasing of electric vehicles (E-Bikes) without operator is classifiable under the heading 9971 ie. Financial and related services under entry Sl No. 15 (ii) of Notification No. 11/2017 CT(R) dated, 28th June, 2017 as amended vide Notification No. 20/2019 CT(R) dated, 30th September, 2019″ and the rate of tax will be the same rate as applicable on supply of like goods involving transfer of title in goods.
The applicant has executed a vehicle lease agreement with a Lessee named M/s. Techsofin Private Limited of Bhubaneswar, Odisha for supply of electric vehicles (E-Bikes) without operator on lease basis.
The Applicant in its written submission contended that prior to 1st October 2019, in the scheme of classification of services by Notification No. 11/2017 Central Tax (Rate) dated 28th June 2017, there were two discrete headings i.e. heading 9966 & heading 9973 relating to the nature of supply. After 1st October 2019, the headings have been amended. Heading 9966 relates to rental services of transport vehicles with operators and Heading 9973 relates to Leasing or rental services without operator.
The applicant sought the advance ruling on the issue Whether leasing of electric vehicles (E-Bikes/ EVs) without operator can be classified under the heading 9973 “Leasing or rental services without operator vide Sl. No. 17 (viia) or (?) (iii) of the Notification No. 11/2017 CT(R) dated, 28th June, 2017 as amended vide Notification No. 20/2019 CT(R) dated, 30th September, 2019?
The Authority for Advance Ruling (AAR), Odisha based upon the existing rules and regulations both the members of AAR have taken different opinions/views.
Opinion/View of AAR SGST Member
Leasing of electric vehicles (E-Bikes) without operator is classifiable under the heading 9971 i.e. Financial and related services under entry SI No. 15 (ii) of Notification No. 11/2017 – CT(R) dated, 28th June, 2017 as amended vide Notification No. 20/2019 CT(R) dated, 30th September, 2019″ and the rate of tax will be the same rate as applicable on supply of like goods involving transfer of title in goods.
Opinion/ View of AAR CGST Member
“Leasing of electric vehicles (E-Bikes/ EVs) is classifiable under the heading 9971 under entry Sl No. 15 (vii) of Notification No. 11/2017 CT(R) dated, 28th June, 2017 as amended and the rate of tax as applicable is 18% (CGST-9% SGST-9%).”
In view of the above, as the opinions/views of both the members of Odisha AAR are different on the impugned issue, hence the matter is transmitted to Appellate Authority of Advance Ruling (AAAR), Odisha in view of the Section 98(5) of the CGST Act, 2017.
AAAR’s Ruling
The AAAR has held that the agreement between the appellant and the lessee clearly demonstrates the intention to transfer the right to use the goods (e-bikes). The terms of the agreement unequivocally establish that the appellant (lessor) has legally and effectively transferred the right to use the goods to the lessee as per the agreed contractual conditions.
Consequently, the transaction squarely falls within the ambit of Entry Sl. No. 15(ii) of the Rate Notification i.e. transfer of the right to use any goods for any purpose (whether or not for a specified period) for cash, deferred payment or other valuable consideration and the rate of tax will be the same rate of tax as applicable on supply of like goods involving transfer of title in goods.
Ruling Details
Applicant’s Name: M/s True Solar Private Limited
Date: 18/12/2024
