Service of moving empty or loaded wagons/rakes at siding is classifiable as railway pushing and towing service
ABCAUS Case Law Citation:
ABCAUS 3036 (2019) (06) AAR
The Applicant was leasing out cranes and equipment and locomotives and provided diesel-hydraulic locomotives to several companies for placement/shunting of rakes/wagons/oil tankers from the siding or terminal of the lndian Railways to the factory premises of the company and vice versa.
The Applicant sought a ruling from GST Authority for Advance Ruling on the classification of the above service under GST and the applicable rate of tax under Notification No. 11/2017 – Central Tax (Rate) dated 28/06/2017 as amended from time to time (h Rate Notifications).
The Applicant submitted that it supplies cranes and equipment on monthly rental basis and charges GST @18%, the service is classified as ‘Leasing or rental services concerning construction machinery and equipment with or without operator’ (SAC 997313). Likewise, it leases out diesel-hydraulic shunting locomotive inter alia to M/s Damodar Valley Corporation (the DVC), which has objected to charging GST at 18% rate. The DVC relied upon Circular No. Books/GST/17-18/pt dated 19/07/2017 of East Central Railway. ln the said circular the railway authority had stated that charges for terminal access, shunting, stabling, haulage or detention is classifiable under ‘leasing or rental services concerning transport equipment with or without operator’ (SAC 997311) and taxable at the rate applicable to the goods. As diesel locomotives are taxable @ 5% under Sl No. 236 of the Rate Notifications (Goods), the service mentioned above is taxable @ 5% as well.
The Applicant, however, maintained that a diesel-hydraulic shunting locomotive is not transport equipment. Furthermore, services provided by the lndian Railways are not like the one she provides to the DVC. The shunting locomotives are not hauling at a stretch but moving to and from the full/empty coal rakes between Siding, to Railway Station. lt is akin to railway pushing and towing service (SAC 996731).
The AAR opined that transportation of coal from Railway Station to Siding was railway transport, and the service of moving empty or loaded wagons/rakes at Siding was nothing but the supporting service of railway pushing and towing (SAC 996731). lt describes the nature of the Applicant’s service more specifically than ‘leasing or rental services concerning transport equipment, including containers with or without operator (SAC 997311).
The AAR stated that the communication from the Railway, which dealt with the GST applicable to different services that the Railways offer to the customer was not relevant in the present context.
Accordingly, it was held that the Applicant’s service was classifiable as ‘railway pushing and towing service’ (SAC 996731) and taxable @ 18% under Sl No 11(ii) of Notification No. 11/2017 – Central Tax (Rate) dated 28/06/2017 as amended from time to time.