In re True Solar Private Limited (GST AAAR Odisha)
In the case of True Solar Private Limited, the applicant sought an advance ruling on whether leasing electric vehicles (E-Bikes) without operators would fall under the classification for “Leasing or rental services without operator” under GST Notification No. 11/2017-CT(R). The applicant, engaged in leasing electric vehicles (EVs) to another company, M/s TechFin Private Limited, argued that the lease terms, including the transfer of rights to use the goods, fit within specific GST provisions under Entry 17(iii) or 17(viia) of the notification. The lease agreement indicated that the vehicles were leased for four years, during which the lessee assumed responsibility for maintenance, insurance, and legal documents. The applicant contended that, even if Entry 17(iii) didn’t apply, Entry 17(viia) would still cover the transaction, as the leasing was akin to the supply of goods under GST.
The Authority for Advance Ruling (AAR) in Odisha could not reach a consensus, with one member classifying the service under financial services and the other under leasing services. Consequently, the matter was referred to the Appellate Authority for Advance Ruling (AAAR). After a thorough review, the AAAR ruled that leasing electric vehicles without an operator is classified under “Financial and related services” under Entry 15(ii) of Notification No. 11/2017-CT(R), meaning the transaction involves the transfer of the right to use goods, subject to tax at the same rate as goods that involve the transfer of title. This decision clarifies that the lease agreement’s nature, with the transfer of possession and control of the EVs to the lessee, falls under the provision for the transfer of rights to use goods, aligning with the legal understanding of “sale” under Article 366(29A)(d) of the Constitution.
