In re Indus Motor Company Pvt. Ltd. (GST AAR Kerala)
In the case of Indus Motor Company Pvt. Ltd. before the GST AAR Kerala, Indus Motor sought clarity on the GST classification and applicable tax rate for its self-drive car rental service, “Indus GO,” which provides vehicles without an operator for personal use. The company queried if its service falls under Service Accounting Code (SAC) 997311, as “leasing or rental services without operator,” subject to an 18% GST rate as per Notification No. 11/2017 (Central Tax Rate), amended by Notification No. 20/2019. Indus Motor contended that because it offers rental services without operators, it should classify its service under SAC 997311, thus qualifying for an 18% tax rate.
The GST Authority evaluated if the rental arrangement constituted a “transfer of right to use” (similar to leasing) or if it was simply a rental without transferring ownership. Referring to legal precedents, the AAR highlighted that for a “transfer of right to use” to apply, substantial control must be with the renter, not the service provider. However, Indus Motor retained control over the vehicles, including monitoring usage, handling repairs, and managing insurance, indicating it had not transferred full rights to users. Thus, the AAR concluded that Indus Motor’s service aligns with leasing or rental without transfer of ownership, classifying it under SAC 997311 and confirming the 18% GST rate.
