Hiring vs. Renting – Difference

The applicant operates AC buses for Brihan Mumbai Electricity Supply Transport Undertaking (BEST) and has to provide the drivers and operate the buses as per the routes provided by BEST.


The AAR decided on whether the services provided by the applicant is covered under the head “services by way of giving on hire to a state transport undertaking, a motor vehicle meant to carry more than twelve passengers” and therefore exempt.


The AAR held that hiring does not include transfer of effective possession and effective control. Since the applicant’s activity included transfer of effective possession and effective control, it amounts to renting of motor vehicles and is liable to GST @ 18% till 13.10.2017 and GST @ 12% from 13.10.2017 onwards.



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