AAR says no GST exemption for tourist vehicles carrying Covid patients

The Authority for Advance Rulings, Maharashtra has ruled that renting or leasing of vehicles registered in tourist category for transportation of Covid-19 passengers by a tours and travels operator would be liable to pay goods and service tax (GST). Experts described the decision as callous on front-line workers.

An applicant company, a tourist operator, submitted that provision of Toyota Innova or equivalent six-seater vehicles with all India tourist permit to carry Covid-19 patients for medical treatment is exempt from GST.

The company had entered into an agreement with Mumbai Corporation of Greater Mumbai (MCGM) to use its vehicles for transporting these patients for medical treatment.

The company based its arguments on the fact that this is a pure service to the local authority -- MCGM.  

However, AAR held that there is nothing on record to show that Innova vehicles supplied by the applicant had been converted into ambulances. Besides, there is no proof of these vehicles transporting only Covid patients for medical treatment, it said.

Also, vehicles were not registered with the regional transport office (RTO) for use as ambulances and instead were registered for use as tourist vehicles, it said.

Rajat Mohan, senior partner at AMRG & Associates, said taxing the transportation of Covid-19 patients by tours and travels operators on behalf of the government agencies is a harsh penalty on a big segment of front-line workers.

"Strong legal arguments have backed this ruling. However, it fails on moral grounds," he said.