JBM Ecolife Mobility Surat Pvt. Ltd. was contracted under the National Electric Bus Program to manage 150 electric buses in Surat, with payments based on kilometers traveled. The company entered a Master Concession Agreement with Surat Municipal Corporation, later assigned to Surat Sitilink Limited, for supervision and payment processing. The buses, operated by drivers and staff from JBM, were controlled in terms of routes and schedules by Surat Sitilink, classifying the service as a rental with operators under SAC 996601.
The issue arose when the petitioner argued that since electric buses do not use traditional "fuel," they should be eligible for concessional GST rates of 5% or 12%, rather than the standard 18% under the residual entry. The key question was whether electricity could be considered "fuel" under Entry 10(i) of Notification No. 11/2017-CT(R).
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The Authority ruled that the service involved rental services of vehicles with operators, as the buses were provided with drivers and staff, while the service recipient controlled operational aspects. It clarified that "fuel" in the CGST Act should be interpreted in its ordinary sense, referring to combustible substances like petrol or diesel, not electricity, which is a form of transmitted energy. The distinction in GST notifications between electrically operated vehicles and conventional fuel vehicles indicated legislative intent to treat them differently. Thus, electricity could not be considered "fuel," and electric bus services could not benefit from concessional GST rates.
Order Date - 29 April 2026
Facts -
- JBM Ecolife Mobility Surat Pvt. Ltd. was awarded a contract under the National Electric Bus Program to supply, operate, and maintain 150 electric BRTS buses in Surat on a gross cost contract basis, where payment depended on kilometers travelled.
- The petitioner entered into a Master Concession Agreement with Surat Municipal Corporation, which was later assigned to Surat Sitilink Limited through a tripartite agreement for supervision and payment processing.
- The buses were operated by drivers and staff engaged by the petitioner, while routes, schedules, and deployment plans were controlled by Surat Sitilink Limited, making the arrangement a rental service with operators under SAC 996601.
- The dispute arose because the petitioner argued that electric buses do not use “fuel” in the conventional sense, and therefore sought clarification whether GST should apply at concessional rates of 5%/12% or at 18% under the residual entry.
Issue -
Order -
- The Authority observed that the contract clearly involved rental services of transport vehicles with operators because the buses were supplied along with drivers and operational staff, while the service recipient retained control over routes, schedules, and deployment. Hence, the activity squarely fell under SAC 996601 dealing with rental services of vehicles with operators.
- The Authority emphasized that the term “fuel” was not defined under the CGST Act and therefore had to be interpreted in its ordinary and scientific sense. It noted that fuel generally refers to combustible substances like petrol, diesel, coal, or gas which generate energy through burning, whereas electricity is merely a form of transmitted energy and not a combustible source itself.
- The Authority further noted that GST notifications themselves separately recognize “electrically operated vehicles” and conventional fuel-operated motor vehicles. This distinction showed legislative intent to treat electric vehicles differently, and therefore electricity could not be artificially included within the meaning of “fuel.”
- Relying on principles laid down by the Supreme Court of India in taxation matters, the Authority held that taxing notifications must be interpreted strictly based on express wording. Since the notification referred only to “fuel” and did not specifically include electricity, concessional GST entries could not be extended to electric bus services by implication.
