2023 (8) TMI 1201 - AAR - GST

Input Tax Credit - GST paid on JCB (including spares) used by the Appellant for movement of goods in its place of business - HELD THAT - There is a restriction on availment of ITC in respect of motor vehicles and Input Tax Credit is not available on motor vehicle , unless it is used for specified purposes like transport, training etc. However, we also find that in terms of provisions of Section 2(76) of the CGST Act, 2017, the expression motor vehicle shall have the same meaning as assigned to it in clause (28) of Section 2 of the Motor Vehicle Act, 1988. On the conjoint reading of Section 2(28) of the Motor Vehicles Act, 1988, the FAQ published in GST Sectoral Series - mining and the Hon ble Apex Court judgement Goodyear India Vs UOI 1997 (2) TMI 229 - SUPREME COURT , it is apparent that Clause (28) of Section 2 of the Motor Vehicles Act, 1988, docs not include mining equipments viz., JCB, tippers, dumpers. Consequently, the GST charged on purchase of earth moving machinery like JCB used for transportation of taxable goods is eligible to be allowed as input credit. Manufacturing is most dependent on material handling systems and equipment. Some material handling equipment includes pallet trucks, order pickers, forklifts, Tipper Lorries, Dump Trucks and other machines/vehicles depending on the manufacturing processes as well as suitability felt by the manufacturers. In the instant case, the applicant uses the JCB that has been purchased for transportation of goods inside their factory premises. Manufacturing is most dependent on material handling systems and equipment. Some material handling equipment includes pallet trucks, order pickers, forklifts, Tipper Lorries, Dump Trucks and other machines/vehicles depending on the manufacturing processes as well as suitability felt by the manufacturers. In the instant case, the applicant uses the JCB that has been purchased for transportation of goods inside their factory premises. Thus, the appellant is eligible for GST paid by them at the time of purchase or repairs including spares w.r.t. vehicles-JCB used in the business for movement of goods in its palace of business to be claimed as input tax credit subject to conditions stipulated in Section 17(5)(a)(ii) and Section 17(2) of CGST Act, 2017.

Summary

Issues Involved:
1. Availability of GST paid on purchase or repairs, including spares, of JCB used by the business for movement of goods as input tax credit.

Summary:

Issue 1: Availability of GST paid on JCB as input tax credit

The applicant, M/s. Sri Kalaiselvan Sago Factory, sought an advance ruling on whether GST paid on the purchase or repairs, including spares, of a JCB used for the movement of goods within their business premises can be claimed as input tax credit.

The applicant cited a previous ruling for M/s Purewal Stone Crusher, which interpreted Section 17(5) of the CGST Act, 2017. This section restricts the availment of ITC on motor vehicles unless used for specified purposes like transportation of goods. The definition of "motor vehicle" under Section 2(76) of the CGST Act aligns with the Motor Vehicles Act, 1988, which excludes vehicles used only in a factory or enclosed premises.

The State Jurisdictional Authority confirmed that the JCB does not fall under the definition of a motor vehicle as per the Motor Vehicles Act, 1988, and thus, the restriction under Section 17(5)(a) of the GST Act does not apply. The Central Jurisdictional Authority also confirmed no pending proceedings against the applicant.

During the hearing, the applicant reiterated that the JCB is used for shifting goods between tanks within the factory. The Authority examined the facts and relevant provisions, including FAQ from the GST Sectoral Series - mining, which supports the eligibility of ITC on earth-moving machinery like JCB used for transportation of goods.

Based on the conjoint reading of Section 2(28) of the Motor Vehicles Act, 1988, and related provisions, the Authority concluded that the GST paid on the JCB used for internal transportation of goods in the factory is eligible for input tax credit, subject to conditions in Section 17(5)(a)(ii) and Section 17(2) of the CGST Act, 2017.

Ruling:

GST paid by the applicant at the time of purchase or repairs, including spares, of JCB used for the movement of goods within the business premises, is available as input tax credit under Section 16(1), subject to conditions stipulated in Section 17(5)(a)(ii) and Section 17(2) of the CGST Act, 2017.