The Gujarat Authority for Advance Ruling (AAR) has held that services relating to operation and maintenance of electric buses under a gross cost contract are liable to GST at 18%, rejecting the applicability of concessional rates available to motor vehicle rentals where fuel cost is included.

The applicant was engaged in providing end-to-end services for electric buses, including operation, maintenance, and charging infrastructure under a public transport project.

The applicant operated electric buses under a Gross Cost Contract (GCC) model, receiving fixed consideration based on per kilometre operations. The buses were deployed under a government-backed initiative promoting electric mobility, with responsibilities including procurement, operation, and maintenance.

The AAR observed that the services involved rental/operational services of buses with drivers, classifiable under SAC 996601, covering “rental services of transport vehicles with operators”.

The primary issue before the AAR was whether the services could fall under Entry No. 10(i) of Notification No. 11/2017-Central Tax (Rate), which provides concessional GST rates (5%/12%) where cost of fuel is included in consideration.

The applicant argued that electricity used in charging electric buses should qualify as “fuel,” thereby making the concessional entry applicable.

Rejecting this argument, the AAR undertook a detailed interpretation of the term “fuel”. It held that fuel traditionally refers to substances that release energy through combustion (e.g., petrol, diesel, gas). Electricity, on the other hand, is an energy carrier, not a combustible substance. Electric buses derive energy from stored electrical power and not from combustion-based fuels.

The authority emphasised that “electricity” cannot be equated with “fuel” either scientifically or in common parlance, and therefore cannot satisfy the condition of inclusion of fuel cost under the concessional entry.

Based on this interpretation, the AAR concluded that the services provided are rental services of electrically operated vehicles with operators. Since electricity does not qualify as fuel, the condition under Entry 10(i) is not met. Consequently, the services fall under residual Entry 10(iii) of Notification No. 11/2017, attracting GST at 18%.

The AAR ruled that concessional GST rates under Entry 10(i) are not applicable to services involving electric buses. Such services are taxable at 18% under the residual entry, irrespective of inclusion of electricity costs in consideration.

Ruling Details

Applicant’s Name: M/s. JBM Ecolife Mobility Surat P Ltd

Citation: JURISHOUR-1086-AAR-2026(GUJ) 

Ruling Date: 28/04/2026

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