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Passenger Transportation Services & GST Implications

CA Himanshu Garg 
on 26 December 2019

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1. Background and our understanding:

Zolo Traveltech Private Limited (hereafter referred as 'The Company'). The Company has a place of business at Haryana in India. The Company is mainly engaged in the business of “Passenger Transportation Services” via Offline booking mode and Online booking mode through Electronic Commerce Operator like Paytm, Red Bus. Bookings are also received through agents for which they are paid agreed commission.

Passenger Transportation Services and GST Implications

The Company took Air-conditioned buses on hire and use them for providing passenger transportation.

The Company operates within state as well as cross-state passenger transportation services.

Major Supplies are in nature of B2C.

Buses running on long routes stays on contracted restaurants for which they receive commission for referring Customer.

The company incurs cost on changing of outlook & renovation of buses (Affixing Zolo Bus Logo and other details).

2. Objective

Considering the above facts about business model, The Company wants to understand the implications of the provisions under CGST Act, 2017 & CGST Rules, 2017 regarding:

A. Invoicing.
B. GST Rates.
C. Input Tax Credit.
D. Charging Section, Taxability, Classification, Place of supply, Time of Supply, Valuation.
E. Accounts & Records required to be maintained.
F. Other Relevant Definitions under CGST Act, 2017.

3. Discussions of the legal provisions:

 

Invoicing:

Relevant provisions of CGST Act & CGST Rules, 2017 in regards to

A. Tax Invoice: As per section 31(2), A registered person supplying taxable services shall, before or after the provision of service but within a prescribed period, issue a tax invoice, showing the description, value, tax charged thereon and such other particulars as may be prescribed:

 

Provided that the Government may, on the recommendations of the Council, by notification and subject to such conditions as may be mentioned therein, specify the categories of services in respect of which––

(a) any other document issued in relation to the supply shall be deemed to be a tax invoice; or
(b) tax invoice may not be issued.

B. Tax invoice Rules.

As per Rule 46 of CGST Rules,

Subject to rule 54, a tax invoice referred to in section 31 shall be issued by the registered person containing the following particulars, namely,

(a) Name, Address and GSTIN of the supplier;
(b) A consecutive serial number not exceeding 16 characters, in one or multiple series, containing alphabets or numerals or special characters- hyphen or dash and slash symbolized as ―-‖ and ―/‖ respectively, and any combination thereof, unique for a financial year;
(c) Date of its issue;
(d) Name, address and GSTIN, if registered, of the recipient;
(f) Name and address of the recipient and the address of delivery, along with the name of the State and its code, if such recipient is un-registered and where the value of the taxable supply is less than fifty thousand rupees and the recipient requests that such details be recorded in the tax invoice;
(g) SAC for services;
(h) Description of goods or services;
(k) Taxable value and Total Value of the supply of goods or services or both taking into account discount or abatement, if any;
(l) Rate of tax and amount of tax charged in respect of taxable goods or services (CGST, SGST, IGST, UTGST or cess);
(n) Place of supply along with the name of the State, in the case of a supply in the course of inter-State trade or commerce;
(o) Address of delivery where the same is different from the place of supply;
(p) Whether the tax is payable on reverse charge basis; and
(q) Signature or digital signature of the supplier or his authorized representative:

Provided also that a registered person[other than the supplier engaged in making supply of services by way of admission to exhibition of cinematograph films in multiplex screens,] may not issue a tax invoice in accordance with the provisions of clause (b) of sub-section (3) of section 31 subject to the following conditions, namely,-

(a) the recipient is not a registered person; and
(b) the recipient does not require such invoice, and shall issue a consolidated tax invoice for such supplies at the close of each day in respect of all such supplies.

In our case:

The company may follow the proviso mentioned just above, The Company may not issue a tax invoice in accordance with the provisions of clause (b) of sub-section (3) of section 31 since in most of the case our recipients are not registered but in that case the company shall issue a consolidated tax invoice for such supplies at the close of each day in respect of all such supplies.

As per Rule 54(4), Where the supplier of taxable service is supplying passenger transportation service, a tax invoice shall include ticket in any form, by whatever name called, whether or not serially numbered, and whether or not containing the address of the recipient of service but containing other information as mentioned under rule 46.

Provided that the signature or digital signature of the supplier or his authorized representative shall not be required in the case of issuance of ticket in accordance with the provisions of the Information Technology Act, 2000 (21 of 2000).

In our case:

The company may follow the Rule 54(4) just mentioned above, the company may issue tax invoice in form of ticket, it may either serially numbered or not, it may either contain the address of the recipient of service (Passengers) or not, but containing other information as mentioned above under rule 46.

For Eg: The Company may follow Invoice series (Zolo/Paytm/date0001, Zolo/Redbus/18120003, Zolo/General/19129999)

Further the signature or digital signature of the supplier or his authorized representative shall not be required in the case of issuance of ticket in accordance with the provisions of the Information Technology Act, 2000 (21 of 2000). Since most of tickets issued by the company are computerized.

GST Rates:

HSN: 9964
Heading of Service: Passenger transport services Description of Service:

Transport of passengers by any motor vehicle designed to carry passengers where the cost of fuel is included in the consideration charged from the service recipient.

  

GST Rate (CGST & SGST each)

Condition attached

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. [Please refer to

Explanation no. (iv)

6%

Full ITC (No restriction)

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