Facts of the case:
In this case, the applicant is engaged in providing end-to-end services relating to the operation and maintenance of electric buses under the Government’s National Electric Bus Program (NEBP). Under the agreement, the applicant was responsible for procurement, operation, and maintenance of electric buses, including deployment of drivers, installation of charging infrastructure, and ensuring compliance with prescribed operational standards. The buses were operated strictly as per routes and schedules determined by the service recipient.
The consideration was structured under a Gross Cost Contract (GCC) model, whereby payment was made on a per kilometre basis (₹59.29/km), irrespective of passenger revenue, and invoices were raised monthly on Surat Sitilink Limited.
The applicant classified the services under SAC 996601 (rental of transport vehicles with operator) and sought clarity on the applicable GST rate. The core controversy arose from whether electricity used in electric buses qualifies as “fuel”, thereby making the service eligible for concessional GST rates under Entry 10(i) of Notification No. 11/2017-CT(R), or whether it falls under the residual Entry 10(iii) attracting 18% GST.
Issue:
Whether electricity can be regarded as “fuel” for the purpose of Entry 10(i) of Notification No. 11/2017-Central Tax (Rate), which provides a concessional GST rate where the cost of fuel is included in the consideration for renting of motor vehicles with operators. Consequentially, it was to be determined whether the applicant’s services would qualify for the concessional rate of 5%/12%, or be taxable under the residual entry at 18% GST.
Held that:
The Authority for Advance Ruling held that the services provided by the applicant are classifiable under SAC 996601, being rental services of transport vehicles with operator, as the operational control over routes and schedules vested with the service recipient.
On the critical question of whether electricity constitutes “fuel,” the Authority observed that the term “fuel” is not defined under the GST law and must therefore be interpreted in its common parlance and dictionary meaning, which consistently denotes a combustible substance used to generate energy.
The Authority held that electricity is not a combustible substance but a secondary form of energy, generated through conversion of primary energy sources and stored in batteries. Accordingly, it cannot be equated with “fuel” in the context of the notification. The Authority further noted that the legislative framework itself distinguishes electrically operated vehicles from conventional motor vehicles in exemption notifications, indicating a conscious differentiation by the legislature.
Applying the principle of strict interpretation of tax notifications, as laid down by the Supreme Court in Dilip Kumar & Company case and reaffirmed in Safari Retreats Pvt Ltd case, the Authority held that concessional entries must be interpreted narrowly and cannot be extended by implication. Since electricity does not qualify as “fuel,” the essential condition of Entry 10(i) is not satisfied. Consequently, the applicant’s services fall under the residual Entry 10(iii) of Notification No. 11/2017-CT(R) and are taxable at 18% GST.
Case name: M/s. JBM Ecolife Mobility Surat P Ltd. dated 28.04.2026
