License Fee for Maintenance of Public Toilet is Exempt from GST: AAR

The Applicant, M/s Public Transport Department Government of Andhra Pradesh, offers public transport facilities backed by the Andhra Pradesh State Road Transport Corporation. The services are provided by road in air-conditioned and non-air-conditioned transport. Apart from this, the applicant also provides courier and Goods Transport Agency (GTA) Services. The applicant also owns the bus stands on which the transport and other related services are carried out. The applicant submits that these bus stands are like assets that give extra income through rentals and leases, and licenses.

The applicant also provides the lavatory and toilet facility in the bus stands through a license with a third party for the maintenance of the toilet facility. The applicant does not collect the money from the passengers; instead, the license holder or the contractors collect a fee of Rs 5 from the users.

The applicant invites tenders, selects the best proposal, and then signs an agreement with the licensee, who pays a monthly license fee.

The applicant filed an application before the Andhra Pradesh Authority for Advance Ruling (AAR) to get the advance ruling on the following questions:

“1. In view of the licenses granted to the tender bidders for maintenance of toilets, whether the license fee paid to the Applicant is exempted in view of the exemption provided vide Sl. No. 76 of Notification No. 12/2017- Central Tax (Rate)?

2. If not, what is the appropriate rate and classification of GST?

3. If the above transaction is exigible to GST, whether it must be on forward charge or reverse charge?”

The AAR observed that the license fee taken by the applicant is for enabling the public access to toilet facilities and ensuring the public convenience is available to the passengers. The authority cited the Decision of the Hon’ble High Court of Andhra Pradesh in Rajeev Yuvajana Sangham v. State of Andhra Pradesh (W.P. No. 16162 of 2022), which ruled that the license fees collected for the maintenance of public toilets by third parties are not subject to GST under Notification No. 12/2017-Central Tax (Rate).

Therefore, based on this, the AAR held that the license fees collected by the applicant from contractors for the maintenance and operation of public toilets are exempt from GST under Sl. No. 76 of Notification No. 12/2017-Central Tax (Rate), read with G.O.Ms.No.588 dated 12.12.2017.