Background:
Earlier, the GST Council in its 52nd meeting, recommended that bus operators organised as companies may be excluded from the purview of section 9(5) of the CGST Act, 2017. This would enable them to pay GST on their supplies using their ITC.
Notification:
Now, the CBIC vide Notification No. 16/2023-Central Tax (Rate) dated October 19, 2023 (“the Notification”) made the following changes in the Notification No. No.17/2017- Central Tax (Rate) dated June 28, 2017:
In clause (i) the words “omnibus or any other motor vehicle”, the words “or any other motor vehicle except omnibus” shall be substituted.
Accordingly, the clause (i) will be read as follows: services by way of transportation of passengers by a radio-taxi, motorcab, maxicab, motor cycle, or any other motor vehicle except omnibus;
The Notification further inserted a new clause (ia) to cover the services by way of transportation of passengers by an omnibus except where the person supplying such service through electronic commerce operator is a company.
Furthermore, inserted an explanation in the said Notification that- “Company” has the same meaning as assigned to it in clause (20) of section 2 of the Companies Act, 2013.
The Notification will be made effective from October 20, 2023.
Impact:
The representation was filed by the industry association that most of the bus operators supplying service through ECO owned one or two buses and were not in a position to take registration and meet GST compliances.
Therefore, w.e.f. January 01 2022, the liability to pay GST on bus transportation services supplied through Electronic Commerce Operators (ECOs) has been placed on the ECO under section 9(5) of the CGST Act, 2017.
Hence, in order to strike a balance between the requirement for simplifying business operations for small operators and the necessity for larger organized entities to avail Input Tax Credit (ITC) on goods and services, the Notification specifically excluded “Company” omnibus operators from the scope of section 9(5) of the CGST Act, 2017.
Similar notifications have been passed under the Integrated Goods and Services Tax Act, 2017 (“the IGST Act”) and the Union Territory Goods and Services Tax Act, 2017 (“the UTGST Act”).
CGST (Rate) Notification: https://taxinformation.cbic.gov.in/view-pdf/1009897/ENG/Notifications
IGST (Rate) Notification: https://taxinformation.cbic.gov.in/view-pdf/1009906/ENG/Notifications
UTGST (Rate) Notification: https://taxinformation.cbic.gov.in/view-pdf/1009915/ENG/Notifications
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