Q Pvt. Ltd from Delhi rented out motor cabs to R Ltd Faridabad (registered under GST) for the month of September. The rental charges amounted to Rs. 8 lakh for the month. Invoice is raised on 4th Nov. and payment is received on 21st October. Input tax credit of Rs 5000 is available.

(a) Determine who is liable to pay tax under GST.
(b) Determine the GST payable amount.


(a) Earlier in service tax, renting of motor cab was taxable under reverse charge and abatement of 60 % was available. But in GST there is no reverse charge on renting of motor cab.

Thus, under GST, Q Ltd. supplier of service of renting of cab is liable to collect GST from recipient and pay to the Govt.

(b) Determination of time of Supply

Section 31(2) provides that a registered taxable person supplying taxable services shall issue a tax invoice, before or after the provision of service but not later than period prescribed in rule (47) of
TAX INVOICE, CREDIT AND DEBIT NOTES RULES. Invoice for supply of services shall be issued within 30 days from the date of supply of service.

Thus, in the given example for supply of services for the month of September, invoice is required to be issued within 30 days i.e. up to 30th October.

As the invoice is issued on 4th Nov, it is not within the time limit of section 31(2) read with rule 47, therefore, the date of provision of service or the date of receipt of payment, whichever is earlier will be the time of supply i.e 30th Sept would be treated as time of supply. The transaction will be reported in the return for the month of September.

Determination of Place of supply

According to section 12(2) of IGST, as service is made to registered person, thus location of recipient i.e. Faridabad, is the Place of supply.
Location of supplier is in Delhi.

As per section 7 of IGST Act, location of supplier and place of supply being in different States, thus, supply of service is made in the course of inter-state trade, hence, IGST shall be charged.

Determination of tax liability

As per GST rates specified in the Notification No. 11/2017-Integrated Tax(Rate) as amended by 39/2017
 renting of motor vehicle designed to carry passengers is taxable @ 5% where the cost of fuel is included in the consideration charged from the service recipient and no ITC is available except ITC taken on input service used in same line of business

In view of the above provision , Q Ltd is to pay (IGST = Rs. 800000*5% = Rs. 40000 and he is not eligible for ITC of Rs. 5000. If it want to avail ITC then it has to pay IGST @ 12%.