2022 (9) TMI 199 - AAR - GST

Exemption from GST - A.C. car hiring services for Covid-19 third wave, for Emergency and for other important matter received by the Local Authority, Ahmedabad Municipal corporation - Services provided to Ahmedabad Municipal Corporation vide their work order No.445/1 dated 01-11-21 - exempt services as stated in Sr. No. 3 of Notification No.12/2017 (Central Tax Rate) dated 28th June 2017 or not HELD THAT - The motor vehicles supplied on rent have been used for the administrative department team i.e. other than public health care work. The details of GST TDS deducted under Section 51 of CGST Act by Ahmedabad Municipal Corporation was obtained and it is observed that Ahmedabad Municipal Corporation has deducted TDS on the payment made to the supplier of service i.e. to applicant considering the service Taxable under GST - the applicant supply do not cover under the work listed in the Twelfth Schedule in relation to functions entrusted to a municipality under Article 243W of the Constitution of India and is not eligible to the exemption under entry No. 3 of Notification No. 12/2017-CT (Rate). Availability of ITC - HELD THAT - The applicant is receiving services from the Registered Taxable person of same line of the business for rendering the car hiring service to the Ahmedabad Municipal Corporation. ITC shall be available on the input services used for making an outward taxable supply of the same line of business. Thus the applicant is eligible to avail the Input Tax Credit on receipt of the service from the same line of business entity subject to the condition prescribed under Notification No. 11/2017-CT (Rate) - in terms of the provision of 17 (5) (b) and entry No. 10 of Notification No. 11/2017-CT (Rate) dated 28-6-17 as amended hold that the applicant is eligible of ITC on receipt of the direct service from the same line of business subject to the conditions specified therein. Whether Direct input services of the same line of business received by the 'service provider' to render the above services as stated in work order No.445/1 dated 01-11-21 issued by Ahmedabad Municipal Corporation is also exempt? - HELD THAT - The question of levy of GST is in relation to supply of Motor Vehicle by the third party to the applicant and supplier of service is third party not the applicant himself. In the instant transaction the applicant is recipient of the service and as per Section 95 of CGST Act this Authority can pronounce ruling in relation to the supply of goods or services or both being undertaken or proposed to be undertaken by the applicant. The ruling pronounce by this Authority will be binding on the applicant as per Section 103 of CGST Act who sought the ruling. Thus, this question is not maintainable.

Issues Involved:
1. Classification of service under Sr. No. 6 (Public Health) of Twelfth Schedule of Article 243W of the Constitution.
2. Eligibility for exemption under Sr. No. 3 of Notification No. 12/2017 (Central Tax Rate).
3. Required documentary evidences or declarations for ensuring exclusive use for public health purposes.
4. Eligibility of Input Tax Credit (ITC) for the service provider.
5. Exemption status of direct input services received from the same line of business.

Issue-wise Detailed Analysis:

1. Classification under Sr. No. 6 (Public Health):
The applicant, M/s Varun Travel, provides car rental services to Ahmedabad Municipal Corporation (AMC) for transporting health department teams during emergencies, including the probable third wave of COVID-19. The applicant argued that these services fall under Sr. No. 6 of the Twelfth Schedule of Article 243W of the Constitution, which includes "Public Health, sanitation, conservancy, and solid waste management." However, the Authority for Advance Ruling (AAR) concluded that the services do not fall under Sr. No. 6 because the work order also mentions "other emergency needs and important works," which are not specifically defined as public health functions.

2. Eligibility for Exemption under Sr. No. 3 of Notification No. 12/2017:
The applicant claimed that the services provided to AMC should be exempt from GST under Sr. No. 3 of Notification No. 12/2017 (Central Tax Rate), which exempts pure services provided to the government or local authorities related to functions entrusted to a municipality under Article 243W. The AAR found that the services provided do not exclusively relate to public health functions listed under Article 243W and the Twelfth Schedule. Therefore, the services do not qualify for the exemption.

3. Required Documentary Evidences or Declarations:
The applicant sought guidance on the necessary documentary evidence to ensure the cars are used exclusively for public health purposes. The AAR stated that this question does not fall under the purview of Section 97(2) of the CGST Act, which outlines the scope of advance rulings. Therefore, the AAR did not provide a ruling on this issue.

4. Eligibility of Input Tax Credit (ITC):
The applicant inquired whether they are entitled to claim ITC on services received from the same line of business. The AAR referred to Section 17(5) of the CGST Act and Notification No. 11/2017-CT (Rate), which allows ITC on input services used for making an outward taxable supply of the same category. The AAR concluded that the applicant is eligible to claim ITC on services received from the same line of business, subject to the conditions specified in the notification.

5. Exemption Status of Direct Input Services:
The applicant asked whether direct input services received from the same line of business are also exempt. The AAR noted that this question pertains to the supply of services by a third party to the applicant, not the applicant's own supply of services. As per Section 95 of the CGST Act, the AAR can only pronounce rulings related to the supply of goods or services undertaken by the applicant. Therefore, this question was deemed not maintainable.

Ruling Summary:
1. The service of renting motor vehicles to AMC does not fall under Sr. No. 6 (Public Health) of the Twelfth Schedule of Article 243W of the Constitution.
2. The service does not qualify for exemption under entry No. 3 of Notification No. 12/2017-CT (Rate).
3. The question regarding required documentary evidence is not maintainable.
4. The applicant is eligible to claim ITC on receipt of services from the same line of business, subject to specified conditions.
5. The question regarding the exemption status of direct input services is not maintainable.

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