Facts – 

• The applicant, M/s Dream Road Technologies Private Limited, provides pre-owned vehicles on operating leases to its customers under different Motor Vehicle Lease Agreements.
• The pre-owned cars are obtained from institutional car companies, car dealers, and individuals, and are registered in the applicant's name and hypothecated to Banks/NBFC.

Issue –

• What is the GST Rate and HSN applicable to the monthly lease fees received from customers for leasing pre-owned Cars?
• Whether Compensation cess applicable to the monthly lease fees received from customers for leasing of pre-owned Cars?

Order –

• The authorities observed that the taxpayer had availed input tax credit on the purchase of new vehicles, which was not applicable to the taxpayer under the relevant notification.
• The supply of leasing of pre-owned motor vehicles is taxable and falls under the scope of supply as defined in the section 7 of the CGST Act, 2017.
• The tax rate applicable is to be determined in accordance with notification no. 11/2017-CT(R) dated 28.06.2017, which states that the tax is to be charged at the same rate of central tax as applicable on the supply of like goods involving transfer of title in goods.
• The applicable compensation cess is also to be determined in accordance with notification no. 1/2017-compensation cess (Rate) dated 28.06.2017.