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2021 (11) TMI 1130 - AAR - GSTInput tax credit - rent bill issued by the service provider who has provided Buses on rent to the applicant - applicability of Sr. No. 8 (vi) of Notification No. 11/2017-CT (Rate) Dated 28.06.2017 - HELD THAT - The eligibility of Input Tax credit is as per the provisions contained under Section 16 subject to the restrictions as stipulated supra under Section 17 of the CGST Act, 2017. It appears that the applicant is under the misplaced notion that eligibility of Input Tax Credit is governed under the provisions of Notification no. 11/2017-CT(Rate) dated 28.6.2007 as amended, whereas it is not so, in as much as non-availment of ITC is a pre-condition for availing the benefit of applicable tax rate for the services rendered by the applicant as provided under the said Notification - For the impugned Passenger transport services of Heading 9964, viz. Transport of passengers by any motor vehicle designed to carry passengers where the cost of fuel is included in the consideration charged from the service recipient , in as much as eligibility to the tax rate as stipulated under sr. no 8(vi) of Notification no. 11/2017-CT(Rate) dated 28.6.2017 as amended is concerned, the same is fully dependent on the condition of availment or otherwise of the Input tax credit by the applicant. The applicant would be eligible to input tax credit on the input services provided they fulfill the conditions as stipulated under section 16 read with section 17 of the CGST Act, 2017, whereas eligibility or otherwise of the tax rate as provided under sr. no. 8(vi) of Notification no. 11/2017-CT(Rate) dated 28.6.2007, as amended vide Notification No. 31/2017-C.T. (Rate), dated 18-10-2017 read with Explanation no. (iv) therein is subject to the pre-condition that Input tax credit of input tax charged on goods and services used in supplying the service, other than the input tax credit of input service in the same line of business (i.e. service procured from another service provider of transporting passengers in a motor vehicle or renting of a motor vehicle), has not been taken.
Issues Involved:
1. Eligibility for Input Tax Credit (ITC) on GST charged at 18% on rent bills for buses. 2. Applicability of the tax rate for transport of passengers by motor vehicle where the cost of fuel is included in the consideration charged. Detailed Analysis: Issue 1: Eligibility for Input Tax Credit (ITC) on GST charged at 18% on rent bills for buses The applicant, engaged in the service of transporting passengers by air-conditioned buses, sought an advance ruling on whether they can claim ITC on GST at 18% mentioned in the rent bill issued by their service provider for renting buses. The relevant legal provisions include Section 16 of the CGST Act, 2017, which allows every registered person to take credit of input tax charged on any supply of goods or services used in the course of business. Section 17(5) of the CGST Act, 2017, lists exceptions where ITC is not available, such as motor vehicles for transportation of persons with a seating capacity of not more than thirteen persons, except when used for further supply, transportation of passengers, or training. The ruling clarified that the eligibility for ITC is governed by the provisions of Section 16, subject to the restrictions under Section 17 of the CGST Act, 2017. The applicant would be eligible for ITC on the rent bill issued by the service provider, provided they fulfill the conditions stipulated under Section 16 read with Section 17 of the CGST Act, 2017. Issue 2: Applicability of the tax rate for transport of passengers by motor vehicle where the cost of fuel is included in the consideration charged The applicant contended that as per Sr.No.8(vi) of Notification No. 11/2017-CT (Rate) dated 28.06.2017, the GST rate for transporting passengers by motor vehicle, where the cost of fuel is included, is 5%. However, this is subject to the condition that ITC on goods and services used in supplying the service (other than ITC of input service in the same line of business) has not been taken. The ruling emphasized that the eligibility for the reduced tax rate of 5% is contingent upon the non-availment of ITC on goods and services used in supplying the service, as stipulated under the notification. The notification was amended by Notification No. 31/2017-C.T. (Rate) dated 13-10-2017, which reiterated this condition. The authority concluded that the applicant's eligibility for the tax rate under Sr.No.8(vi) of Notification No. 11/2017-CT (Rate) is subject to the condition that ITC on goods and services used in supplying the service (other than ITC of input service in the same line of business) has not been taken. Order: The ruling provided by the Authority for Advance Ruling, Chhattisgarh, concluded that the applicant is eligible for ITC on the rent bill issued by the service provider, subject to the fulfillment of conditions under Section 16 read with Section 17 of the CGST Act, 2017. The applicability of the reduced tax rate for transporting passengers by motor vehicle, where the cost of fuel is included, is subject to the condition that ITC on goods and services used in supplying the service has not been taken.
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