2019 (6) TMI 487 - AAR - GST

Input tax credit - purchase of Motor Vehicles for supply of rent-a-cab service in terms of section 17(5)(b)(iii) of the Act - section 17(5)(a)(B) of the GST Act - HELD THAT - Amended provisions of section 17(5)(b)(iii) of the GST Act do not contain reference to the rent-a-cab service. However, post amendment, input tax credit shall not be available in respect of supply of the service of renting or hiring of motor vehicles in terms of section 17(5)(b)(i) of the GST Act, unless the inward and the outward supplies are of the same category, standalone or as an element of a taxable composite or mixed supply. Passenger transportation service is classified under SAC 9964. Transportation of passengers, with or without accompanied belongings, is taxable under Sl No. 8 of Notification No. 11/2017-CT (Rate) dated 28/06/2017 (corresponding State Notification No. 1135 - FT dated 28/06/2017), as amended from time to time (hereinafter collectively called the Rate Notification) - Renting of any motor vehicle, however, is classified under SAC 9966. It is taxable under Sl No. 10(i) of the Rate Notification. The recipient of this service is not a passenger. He is enjoying the service of having provided a motor vehicle, with or without a driver, for use in whatever way he likes for the duration of the renting period. It may remain parked for the entire duration of renting without actual transportation of any person. Even when any person the recipient of the service or someone of his choice - is being actually transported, the consideration is paid not for the distance travelled, but for renting the cab. Rent-a-cab is not defined in the GST Act. Nature of the Applicant s service is, therefore, derived from what is stated in the Application and what can be ascertained from the invoices. The Applicant provides cab rental service inter alia to institutions like West Bengal Postal Service. The recipient, has to pay the Applicant a certain amount per month as consideration irrespective of what distance the cab travels in a particular month. Additional amount has to be paid if the cab is retained for extra hours or requisitioned on holidays. For the purpose of covering the cost of fuel, the distance travelled needs to be brought into play, but only if it crosses a certain threshold. It is, therefore, clear from the above discussion that the nature of the service the Applicant provides is classifiable under SAC 9966 as renting of a motor vehicle. Credit of GST paid on purchase of motor vehicles or other inputs for the supply of the Applicant s service is not, therefore, admissible in terms of section 17(5)(b)(i) of the GST Act. GST paid on the purchase of motor vehicles for supplying rent-a-cab service is not admissible for credit in terms of section 17(5)(b)(i) of the GST Act.

Summary

Issues:
1. Admissibility of the application

Admissibility of the application:
The Applicant sought a ruling on the admissibility of input tax credit paid on the purchase of motor vehicles for supplying rent-a-cab service. The concerned officer from the Revenue did not object to the admissibility of the application, stating that the question raised was not pending or decided in any GST Act proceedings. The application was admitted under section 97(2)(a) & (d) of the GST Act.

Submission of the Applicant:
The Applicant argued that credit of input tax paid on motor vehicles for rent-a-cab service should be admissible under section 17(5)(a)(B) of the GST Act, as the service is associated with passenger transportation. Invoices provided showed charges based on distance travelled.

Submission of the Revenue:
The Revenue officer noted that post-amendment, input tax credit for motor vehicles used in rent-a-cab service should be examined under section 17(5)(a)(B) of the GST Act. Renting a cab is solely for passenger transportation, making the Applicant eligible for input tax credit.

Observations and findings of the Bench:
Pre-amendment, credit for GST paid on inputs for rent-a-cab service was restricted. Post-amendment, input tax credit eligibility for motor vehicles used in rent-a-cab service is under section 17(5)(a)(B) of the GST Act. The Bench analyzed the nature of passenger transportation service versus renting of motor vehicles, concluding that the Applicant's service falls under SAC 9966 as renting a motor vehicle, making GST credit inadmissible under section 17(5)(b)(i) of the GST Act.

Ruling:
The ruling stated that GST paid on motor vehicles for supplying rent-a-cab service is not admissible for credit under section 17(5)(b)(i) of the GST Act. The ruling remains valid unless declared void under relevant provisions.

This detailed judgment analyzed the admissibility of input tax credit for motor vehicles used in rent-a-cab service, considering pre and post-amendment provisions of the GST Act and distinguishing between passenger transportation service and renting of motor vehicles to determine credit eligibility.