9911796707
|
Home
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2021 (12) TMI 884 - AAR - GSTInput tax credit - Motor cars of seating capacity not exceeding 13 (including Driver) leased or rented to customers - Motor cars of seating capacity not exceeding 13 (including Driver) registered as public vehicle with RTO to transport passengers, provided to their different customers on lease or rental or hire - Renting or Leasing or Hiring Motor Vehicles to SEZ to transport the employees of the customers without payment of IGST under LUT - Section 17(5) (a)(A) of Central Goods and Service Tax Act, 2017 - HELD THAT - The activity undertaken by the applicant is supplying services of car hire/rentals with the drivers and the recipient uses the services received for the transportation of their staff, Associate, etc. When in respect of Schedule-I of the agreement with Amazon, the payment is made per vehicle- wise as a 'Fixed Monthly Packaged Model', the payment is calculated based on vehicle-wise/Trip-wise in the case of Fidelity Business. The terms of service to be extended in all such agreements/schedules are supply of vehicles of certain standards, fixed with tracking accessories/panic buttons qualified drivers. The supply is restricted to the Vehicle with the Drivers. The usage, i.e., Trip Schedules, routes, etc are done by the Transport team of the Vendor - reading the full agreement clearly shows that the supply extended is only supply of services of renting/hiring of vehicles with operator classifiable under SAC 9966 - 'Renting of Vehicles with Operators' . This stands established by the fact that the applicant in their invoices raised on Amazon and Fidelity, copies of which are provided, have mentioned the SAC as 9966. The exception provided at Section 17(5)(a)(A) is that the ITC in respect of Motor vehicles having approved seating capacity of not more than thirteen persons are available when they are used for making further supply of such motor vehicles. The contention of the applicant is that they are buying and using the vehicles for supplying services of 'Renting of Vehicles with Operators' and the same is 'further supply of such vehicles' in as much as 'Supply' as defined under Section 7 of the Act includes all forms of supply of goods or services such as rental, lease for a consideration in the course of furtherance of business - it could be construed that Section 17(5) (a) (A) of CGST Act, 2017 allows ITC of GST paid on purchase of motor vehicles for transportation of persons having approved seating capacity of not more than thirteen persons (including the driver), only when the taxable person makes further supply of such motor vehicles. The applicant in this case is a service provider, who provides service of renting/leasing motor vehicles. The taxable outward supply in this case does not include further supply of such purchased motor vehicles. Hence the applicant is ineligible to avail ITC on motor vehicles as per section 17(5)(a) (A) of CGST Act 2017. In the case at hand, from the various clauses of the agreement it is seen that the applicant is obligated to supply on rental/hire basis vehicles of particular standards with the drivers to their vendors - Therefore, it is evident that the supply made by the applicant is rental/hire of such vehicles and the activity of transportation of employee/associates is undertaken by the Vendor. Thus, in as much as the activity undertaken by the applicant is only renting/hiring of the Motor Vehicles with the operators and not undertaking transportation of passengers, the exception at S. 17(5)(a)(B) is not available to the applicant. Whether the supply of services by way of Renting or Leasing or Hiring Motor Vehicles to SEZ to transport the employees of the customers without payment of IGST under LUT is deemed as taxable supply? - whether ITC is admissible on Motor Vehicles procured and used commonly for such supply to SEZ and other than SEZ supplies? - HELD THAT - According to Section 7(5)(b) read in conjunction with section 5(1) of IGST Act 2017, supply of goods or services or both to a SEZ developer or a SEZ unit shall be treated as a supply in the course of interstate trade or commerce and leviable to tax under IGST Act. Also in accordance with Section 16(1) of IGST Act 2017, supply of goods or services to SEZ developer or SEZ unit is classified as Zero rated supply . In addition, section 16(3)(a) of IGST Act 2017 enables a registered person to make zero rated supply under LUT without payment of IGST. Therefore, supply of renting/hiring of such Motor Vehicles to SEZ under LUT is a taxable supply - since the ITC of the Tax paid on purchase of such vehicles are restricted as per the provisions of S.17(5)(a) and not Excepted under S. 17(5)(a)(A). The ITC is not admissible on the tax paid on procurement of such vehicles.
Issues Involved:
1. Availability of Input Tax Credit (ITC) on GST paid for motor cars leased or rented to customers under Section 17(5)(a)(A) of the CGST Act, 2017. 2. Availability of ITC on GST paid for motor cars registered as public vehicles with RTO and provided on lease or rental under Section 17(5)(a)(B) of the CGST Act, 2017. 3. Taxability and ITC admissibility for services of renting or leasing motor vehicles to SEZ units without payment of IGST under LUT. Issue-wise Detailed Analysis: 1. ITC on Motor Cars Leased or Rented to Customers (Section 17(5)(a)(A)): The applicant provides motor vehicles on hire or rental basis and classifies this service under SAC 996601, opting for a 5% GST rate without availing ITC. The applicant contends that leasing motor vehicles constitutes a "further supply" under Section 7(1)(a) of the CGST Act, 2017, thus making them eligible for ITC under Section 17(5)(a)(A). However, the authority found that the applicant's supply is classified as "Renting of Vehicles with Operators" (SAC 9966), which does not qualify as "further supply of such motor vehicles." Consequently, the applicant is ineligible for ITC under Section 17(5)(a)(A). 2. ITC on Motor Cars Registered as Public Vehicles (Section 17(5)(a)(B)): The applicant argued that their motor vehicles, registered as public vehicles with the RTO and used to transport passengers, should qualify for ITC under Section 17(5)(a)(B). The authority examined the agreements and found that the applicant provides vehicles with drivers to vendors, who then use these services for transporting their staff. The applicant's activity is classified as renting/hiring vehicles, not directly transporting passengers. Therefore, the exception under Section 17(5)(a)(B) does not apply, and the applicant is not eligible for ITC. 3. Taxability and ITC for Renting or Leasing Motor Vehicles to SEZ (Section 16 of IGST Act): The applicant supplies services to SEZ units under LUT without paying IGST, which is considered a zero-rated supply under Section 16 of the IGST Act, 2017. The authority confirmed that such supplies are taxable. However, since ITC on the purchase of motor vehicles is restricted under Section 17(5)(a) and not excepted under Section 17(5)(a)(A) or (B), the applicant is not eligible for ITC on motor vehicles used for supplying services to SEZ units. Ruling: 1. GST paid on motor cars leased or rented with operators is not available as ITC under Section 17(5)(a)(A) of the CGST Act, 2017. 2. GST paid on motor cars registered as public vehicles and provided on lease or rental is not available as ITC under Section 17(5)(a)(B) of the CGST Act, 2017. 3. Supply of services by renting or leasing motor vehicles to SEZ units without payment of IGST under LUT is taxable, but ITC on motor vehicles procured for such supply is not admissible under Section 17(5)(a)(A) of the CGST Act, 2017.
|
