5% GST not applicable on local transportation services says Rajasthan AAR
- | Divita S Gupta
In a ruling by the Rajasthan bench of the Authority on Advance Ruling, it was held that a GST of 5% is not applicable on supply of local transportation services. The applicant, an enterprise providing transportation services to tourists including services like elephant rides, refreshments, local sightseeing, tour guides etc. It is common practice in the tourism industry in the area that tour operators provide a complete package tour to tourists. Tour operators generally sign on sub operators for providing specific services. The applicant then raises a single invoice furnishing details of all services provided. However, the final amount charged by the tour operator is a grand total of all services provided to the tourist. The applicant sought an advance ruling to clarify whether the rate of 5% under heading 9985(i) is applicable on the transaction which the applicant intends to undertake wherein a single invoice is raised with regard to services provided. The Rajasthan AAR held that a bill issued by a tour operator for supply of services should be inclusive of charges of accommodation and transportation required for such a tour. The conjunction clearly explains that accommodation and transportation are must elements for a tour whereas conjunction ‘or’ may have rendered the option between accommodation and transportation.