The Gujarat AAR has held that services related to the operation and maintenance of electric buses under a gross cost contract are subject to an 18% GST rate. This ruling rejects the applicability of concessional rates generally available for motor vehicle rentals where fuel costs are included.
The business of the applicant was to deliver services related to electric buses, including operation, maintenance, and charging infrastructure under a public transport project.
The applicant operated electric buses under a Gross Cost Contract (GCC) model, receiving a fixed payment as per the number of kilometres driven. These buses were part of a government-backed initiative aimed at promoting electric mobility. The applicant’s responsibilities included procuring, operating, and maintaining the buses.
The AAR noted that the services provided were classified as rental or operational services of buses with drivers, categorised under SAC 996601, which includes “rental services of transport vehicles with operators.”
Before AAR, the issue was whether the services could fall under Entry No. 10(i) of Notification No. 11/2017-Central Tax (Rate), which furnishes concessional GST rates (5%/12%) where the cost of fuel is included in consideration.
The applicant mentioned that electricity used to charge electric buses must be treated as “fuel”, thereby making the concessional entry applicable.
The AAR rejected this argument and provided a detailed interpretation of the term “fuel.” It concluded that fuel traditionally refers to substances that release energy through combustion, such as petrol, diesel, and gas. In contrast, electricity is an energy carrier rather than a combustible substance. Electric buses obtain their energy from stored electrical power rather than from fuels that require combustion.
Also Read: What If Electricity Comes Under GST in India?
The authority stated that electricity cannot be considered equivalent to fuel, either scientifically or in common parlance, and thus cannot fulfil the condition for inclusion of fuel cost under the concessional entry.
As per this interpretation, AAR concluded that the services furnished are rental services of electrically operated vehicles with operators. As electricity is not qualified as fuel, the condition under entry 10(i) is not fulfilled. Therefore, the services fall under residual Entry 10(iii) of Notification No. 11/2017, and GST at 18% is applicable.
No concessional GST rates under Entry 10(i) apply to services of electric buses, AAR ruled. These services are taxable at an 18% rate under the residual entry, regardless of whether electricity costs are included in the consideration.
| Applicant’s Name | M/s. JBM Ecolife Mobility Surat P Ltd |
| GSTIN Applicant | 24AAFCJ4549P1Z1 |
| Advance Ruling No. | GUJ/GAAR/R/2026/13 |
| Present of Applicant | Shri Kavish Goyal and Shri Rohan Pahwa |
| Gujarat AAR | Read Order |
