2019 (6) TMI 1269 - AAR - GST

Input tax credit - inputs/capital goods - purchase of motor vehicles - appellant engaged in supplying cabs on a rental basis - HELD THAT - Rent-a-cab is not defined in the GST Act. Nature of the Applicant s service is, therefore, derived from what is stated in the Application and what can be ascertained from the invoices. The Applicant provides cab rental service inter alia to institutions like West Bengal Postal Service. The recipient, as discussed in para 4.6, has to pay the Applicant a certain amount per month as consideration irrespective of what distance the cab travels in a particular month. The additional amount has to be paid if the cab is retained for extra hours or requisitioned on holidays. To cover the cost of fuel, the distance travelled needs to be brought into play, but only if it crosses a certain threshold. The nature of the service the Applicant provides is classifiable under SAC 9966 as renting of a motor vehicle. The credit of GST paid on the inward supply of motor vehicles for the supply of the Applicant s service is not admissible in terms of section 17(5)(a) of the GST Act.

Summary

Issues:
1. Admissibility of input tax credit on the purchase of motor vehicles for supplying rent-a-cab service.

Analysis:
1. Admissibility of the application:
- The Applicant sought a ruling on the admissibility of input tax credit on the purchase of motor vehicles for supplying cabs on a rental basis.
- The question was deemed admissible under section 97(2)(a) & (d) of the GST Act, and the application was admitted by the Authority.

2. Submission of the Applicant:
- The Applicant argued that as a supplier of rent-a-cab service, she should be eligible to claim input tax credit on the purchase of motor vehicles used for passenger transportation services.
- The Applicant provided photocopies of invoices showing the association of the service with passenger transportation.

3. Submission of the Revenue:
- The Revenue officer highlighted the amendment in the GST Act, allowing input tax credit on the purchase of motor vehicles for rent-a-cab services post-01/02/2019.
- It was argued that the Applicant, being a supplier of rent-a-cab service, should be eligible for input tax credit under the amended provisions.

4. Observations and findings of the Bench:
- The Bench clarified the provisions under section 17(5) of the GST Act regarding input tax credit on motor vehicles used for transportation services.
- The distinction between passenger transportation service (SAC 9964) and renting of motor vehicles (SAC 9966) was analyzed to determine the nature of the Applicant's service.
- It was concluded that the Applicant's service falls under SAC 9966 as renting of a motor vehicle, making the GST paid on the inward supply of motor vehicles not admissible for credit.

Ruling:
- The final ruling stated that GST paid on the inward supply of motor vehicles for supplying rent-a-cab service is not admissible for credit under section 17(5)(a) of the GST Act.
- The ruling was declared valid unless voided under the relevant provisions of the GST Act.