GST on leasing goods vehicles to GTA where right to use is transferred

In re Ishan Resins & Paints Limited (GST AAR West Bengal)

Classification of the service of leasing goods vehicles to GTA where the right to use is transferred

The Applicant intends to lease out vehicles like trucks, tankers etc. that are designed to transport goods. The control and possession of the vehicle will be transferred to the lessee, who will engage operator and bear the cost of repair, insurance etc. It is, therefore, not classifiable under SAC 9966, which is restricted to rental services of transport vehicles with operator.

The service is classifiable under SAC 997311 as leasing or rental services concerning transport equipment without operator. It amounts to the transfer of the right to use the goods and taxable under SI No. 17(iii) of the Rate Notification.

Section 17(5)(a) of the GST Act does not allow input tax credit on inward supply of motor vehicles of a specific category (those meant for transportation of persons having seating capacity not exceeding thirteen persons). The restriction, therefore, does not apply to the goods transport vehicles. SI No. 17(iii) of the Rate Notification does not prohibit claiming input tax credit on the goods given on lease.

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