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2023 (8) TMI 1205 - AAR - GSTInput tax credit - input services - renting/hiring of motor vehicles with seating capacity of less than thirteen persons (including driver) for providing transport facilities to women employees working beyond 8.00 PM - can ITC be availed for services received from the date of introduction of proviso to section 17(5)(b) (iii) of CGST Act, 2017 with effect from 1st February 2019? HELD THAT - With effect from 01.02.2019, Input Tax Credit has not been allowed on leasing, renting or hiring of motor vehicles, for transportation of persons, having approved seating capacity of not more than thirteen persons (including the driver) - However, as per the proviso to Section 17(5)(b), input tax credit in respect of such goods or services or both shall be available, where it is obligatory for an employer to provide the same to its employees under any law for the time being in force. In the instant case, it has been specifically mentioned in the invoices issued by the service providers that the seating capacity of the motor vehicles (including driver) is less than thirteen persons. However, it is obligatory on the part of the Applicant to provide transport facilities to women employees working beyond 8.00 PM, as per the provisions of the Tamilnadu Shops and Establishment Act, 1947 - it is clear that Section 17(5) of the CGST Act blocks input tax credit on motor vehicles used in transport of passengers up to the date of amendment ie., 01.02.2019. With effect from 01.02.2019, ITC is not allowed on leasing, renting or hiring of motor vehicles for transportation of passengers having approved seating capacity of not more than thirteen persons (including driver). The motor vehicles used by the Applicant have seating capacity of less than 13 persons, making them ineligible to avail ITC on such services. ITC is not blocked on the renting of motor vehicles to provide transport facilities to women employees working between 8.00 PM to 6.00 AM as it is obligatory for an employer to provide the same to its employees under the law for the time being in force (Tamilnadu Shops and Establishment Act, 1947) as per Section 17 (5)(b) of the CGST Act, 2017 only from 28.05.2019, which is the date of the Notification issued by the Tamil Nadu Government in this regard.
Issues Involved:
1. Eligibility of Input Tax Credit (ITC) on tax paid for leasing/renting/hiring of motor vehicles for transporting women employees. 2. Applicability of ITC from the date of introduction of the proviso to Section 17(5)(b)(iii) of the CGST Act, 2017. Summary: Issue 1: Eligibility of ITC on tax paid for leasing/renting/hiring of motor vehicles for transporting women employees The Applicant, M/s Access Healthcare Services Private Limited, sought an advance ruling on whether the tax paid on input services for leasing/renting/hiring of motor vehicles to provide transportation facilities to women employees is eligible for Input Tax Credit (ITC). The Applicant operates in shifts to cater to customers outside India and provides transportation facilities to women employees as mandated by the Tamilnadu Shops and Establishment Act, 1947. The Act requires employers to provide transportation for women employees working between 8.00 PM and 6.00 AM for their safety. The Applicant argued that the GST paid on such transportation services should be eligible for ITC, citing the amended Section 17(5) of the CGST Act, 2017, which allows ITC on goods or services that are obligatory for an employer to provide under any law. The Applicant referenced Circular No. 172/04/2022 and previous rulings supporting their claim. The Authority examined the facts and supporting documents, including agreements and invoices from service providers indicating the use of motor vehicles with seating capacities of less than 13 persons. It was noted that Section 17(5) blocks ITC on motor vehicles used for passenger transport with seating capacities of less than 13 persons, except when obligatory under law. Issue 2: Applicability of ITC from the date of introduction of the proviso to Section 17(5)(b)(iii) of the CGST Act, 2017 The Authority found that the Applicant is mandated to provide transportation facilities to women employees working beyond 8.00 PM as per the Tamilnadu Shops and Establishment Act, 1947, effective from the Notification dated 28.05.2019. Therefore, ITC is not blocked on renting motor vehicles for this purpose from 28.05.2019. Ruling: 1. The Applicant is entitled to avail ITC on the tax paid towards leasing/renting/hiring of motor vehicles for providing transport facilities to women employees alone, who are arriving or leaving the workplace between 8.00 PM to 6.00 AM. 2. ITC can be availed with effect from 28.05.2019, subject to the provisions of Section 16 of the CGST/TNGST Act, 2017.
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