Assessee is entitled to claim ITC on vehicle modified and supplied as an ambulance

[CA Bimal Jain]

The AAR, Telangana in IN RE: M/S. RAMINFO LIMITED  - 2023 (5) TMI 71 - AUTHORITY FOR ADVANCE RULING, TELANGANA ruled that assessee can claim Input Tax Credit (“ITC”) on purchase of 7 seater vehicle which will be transformed into an ambulance for further supply.

Facts:

M/s. Raminfo Limited (“the Applicant”) has a work order from the Government of Tripura for supply of ambulances (Mobile Common Service Centres). For this purpose, they are procuring Maruti Suzuki Eeco (7 seater) and modifying the same in their workshop in Hyderabad, Telangana State.

The Applicant filed an advance ruling before the AAR, Telangana to seek clarity on the following matter viz., rate of GST for the supply of goods, admissibility of ITC on purchase of vehicles and other components.  

Issues:

Whether the Applicant is eligible to take ITC on purchase of Maruti Suzuki Eeco (7 seater) which will be transformed into an ambulance?

Held:

The AAR, Telangana in  IN RE: M/S. RAMINFO LIMITED  - 2023 (5) TMI 71 - AUTHORITY FOR ADVANCE RULING, TELANGANA held as under:

• Observed that, the Applicant will purchase the Maruti Suzuki Eeco (7 seater) and thereafter he will transform such vehicle into an ambulance and will supply such ambulances to the Government of Tripura.
• Noted that, the purchased vehicle falls under HSN 8703 which inter alia covers “Motor cars and other motor vehicles principally designed for the transport of persons (other than those of heading 8702)”.
• Further noted that, as per Section 17(5)(a) of the Central Goods and Services Tax Act, 2017 ("the CGST Act”) the ITC on purchase of vehicles which are meant for further supply is not a blocked under Section 17(5) of the CGST Act.
• Held that, the Applicant is eligible to take ITC of tax paid on purchase of vehicle which is used in furtherance of his business and the Applicant will charge GST @ 28% as per Schedule IV of the Notification 01/2017-Central Tax (Rate) dated June 28, 2017 ("Goods rate notification”) on supply of ambulance to the Government of Tripura.

Relevant Provisions:

Section 17: Apportionment of Credit and block credit

1. ………………
2. ………………
3. ……………..
4. ……………..
5. Notwithstanding anything contained in sub-section (1) of section 16 and subsection (1) of section 18, input tax credit shall not be available in respect of the following, namely:-

(a) motor vehicles for transportation of persons having approved seating capacity of not more than thirteen persons (including the driver), except when they are used for making the following taxable supplies, namely:-

(A) further supply of such motor vehicles; or

(B) transportation of passengers; or

(C) imparting training on driving such motor vehicles.

The Goods rate Notification:

Schedule IV:

HSN code	Description	Rate of GST applicable
8702	Motor vehicles for the transport of ten or more persons, including the driver [other than buses for use in public transport, which exclusively run on Bio-fuels]	28%
8703	Motor cars and other motor vehicles principally designed for the transport of persons (other than those of heading 8702), including station wagons and racing cars [other than Cars for physically handicapped persons], other than those mentioned at S. Nos. 1308 to 1320 above	28%

(Author can be reached at [email protected])