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TMI Blog2018 (5) TMI 649X X X X Extracts X X X X X X X X Extracts X X X X ..... n the course of carrying on of the business. There is a supply of cash vans, which are goods', for a consideration and the transaction is in the natural course of business. The transaction and the provisions are obvious - supply of such motor vehicles as scrap after its usage is an activity of 'supply' in the course or furtherance of business and such transaction would attract GST. Rate of GST and Compensation Cess - Held that: - whether the vehicles are sold as scrap and unusable OR sold as old vehicles is not found confirmed from any document. It is generally seen that there is surrender of the RTO Registration Book when the vehicles are disposed off as scrap. Hence, it needs to be ascertained as to whether the vehicles are sold as scrap. For vehicles sold as scrap which does not amount to sale of a vehicle as such, the rate of the material sold as scrap would apply - In absence of the requisite details, the applicant are directed to go through the N/N. 1/2017-CentraI/State Tax (Rate) and N/N. 1/2017-Compensation Cess (Rate), as amended from time to time. Ruling:- The question is answered in the affirmative. As regards rate of GST and/or Compensation Cess, the details b ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ST Act would be mentioned as being under the GST Act . 02. FACTS AND CONTENTION - AS PER THE APPLICANT The submissions, as reproduced verbatim, could be seen thus- Statement of relevant facts having a bearing on the question(s) raised. The applicant is having cash management network pan India. During the course of providing cash management services, the applicant is engaged in following activities: Providing ATMs and installing the same at various locations across India Managing cash circulation through transporting cash from currency chests to bank branches Cash pick up and delivery from and to dedicated banks Such transportation of cash is done through security vans popularly known as cash carry vans. The applicant purchases raw motor vehicles and with the requisite fabrications, gets it converted to cash carry vans. The applicant also pays GST on fabrication. For this purpose, the applicant purchases motor vehicles and pays GST (Goods and Services tax). Credit of such GST is not availed by the Applicant presently. While purchasing cash carry vans under pre-GST era, the applicant had paid Central Excise Duty as well as Value Added tax. Wh ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e is volume, frequency, continuity or regularity of such transaction; (d) supply or acquisition of goods including capital goods and services in connection with commencement or closure of business; (e) provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members; (f) admission, for a consideration, of persons to any premises; (g) services supplied by a person as the holder of an office which has been accepted by him in the course or furtherance of his trade, profession or vocation; (h) services provided by a race club by way of totalisator or a licence to book maker in such club ; and (i) any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities; Clause (c) of the above definition may cause certain doubts that even if a stray transaction of selling scrap is covered under the definition of 'business'. However, it is very important to note that Clause (c) refers that such activity or transaction should be in the nature of any trade, commerce, manufacture, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s under: SCHEDULE 1 [See section 7] ACTIVITIES TO BE TREATED AS SUPPLY EVEN IF MADE WITHOUT CONSIDERATION 1. Permanent transfer or disposal of business assets where input tax credit has been availed on such assets .. On analysing the above clause, it reveals that permanent transfer or disposal of business assets is also treated as supply. However, the important point to be noted is such transfer or disposal will be deemed to be supply only where input tax credit has been availed on such assets. Therefore, the disposal of cash carry vans should not be regarded as supply and no GST should be payable since the applicant is not in the business of selling cash carry vans and the applicant has not availed any input tax credit on such asset. Question 2 If the answer to Question 1 is in affirmative, whether Input tax Credit is available to CMS Info Systems Ltd. ('CMS' or 'the applicant') on purchase of motor vehicles i.e. cash carry vans which are purchased, used for cash management business and supplied post usage as scrap? In any case, if the stray transaction of sell of cash carry van is considered to be supply then the bar of t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... emost principle of interpretation of a statute in every system of interpretation is the literal rule of interpretation. The other rules of interpretation e.g. the mischief rule, purposive interpretation etc. can only be resorted to when the plain words of a statute are ambiguous or lead to no intelligible results or if read literally would nullify the very object of the statute. Where the words of a statute are absolutely clear and unambiguous, recourse cannot be had to the principles of interpretation CIVIL APPEAL NO. 2684 OF 2007 other than the literal rule, vide Swedish Match AB vs. Securities and Exchange Board, India, AIR 2004 SC 4219 = 2004 (8) TMI 389 - SUPREME COURT OF INDIA SUBMISSION dt.05.03.2018 Without prejudice to our application and submissions during the personal hearing; we Wish to add and submit as under with reference to query on Input Tax Credit available on purchase of Cash Vans used to transport cash and other valuable items from clients premises (usually banks)- l) As per Section 17(5) of the Central Goods and Services Tax Act, 2017 (5) Notwithstanding anything contained in sub-section (1) of section 16 and subsection (1) of secti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Credit paid on purchase of such vehicles based on following interpretation - As per provisions of Section 16 of the CGST Act - Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business. As the applicant is going to use the said vehicle in furtherance of the business of transporting valuables (cash and bullion), we feel Input Tax Credit shall be available relying provisions of Section 17(5)(a)(ii) (supra); - The applicant feels the valuables (cash and bullion) as transported is goods and not money in the given context. The applicant is given a consignment by the recipient of its service to deliver the same to an agreed premises for which a remuneration is given. Hence no doubt the valuable transported is money but the same in the given context for the applicant is not money but only a consignment/ goods for delivery. For this we need to refer the opening remarks of Section 2 which defines various terminologies u ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The term 'currency' has been defined in the Foreign Exchange Management Act, 1999. The extract of the definition is reproduced herein below (h) currency includes currency notes, postal notes, postal orders, money orders. cheques, drafts, travellers cheques, letters of credit, bills of exchange and promissory notes credit cards or such other similar instruments as may be notified by the Reserve Bank; Accordingly, with reference to the above definition of the term currency, it may be noted that currency includes, inter alia, currency notes, cheques, draft. b. It is pertinent to note that the words used in the CGST rules are -'goods being transported . Thus, e-way bill is not required to be generated when currency is transported. It may be appreciated that in spite of specific exclusion of money from the definition of goods, currency is considered as goods in the Annexure, Further, even in the case of applicant, currency is being 'transported' in a secured vehicle by the applicant. c. Accordingly, 'currency' should be treated as goods, And as the Applicant is transporting currency in the secured vans, which is treated as goods as per the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urt is 'for the purpose of taxability, definition of 'goods' shall exclude newspapers whereas for the purpose of C Forms, 'goods' shall include newspapers. Similarly, in the present case, for the purpose of taxability, 'money' is excluded from the definition of 'goods' whereas for the purpose of input tax credits, goods' would include 'money'. 6) Our case is more strengthened in light of the fact that cash carry vans are registered as 'goods carriage' under Motor Vehicles Act, 1988. The definition of 'goods' under Motor Vehicles Act, 1988 reads as under: goods Includes live-stock, and anything (other than equipment ' ordinarily used the vehicle) carried by a vehicle except living persons. but does not include luggage or personal effects carried in a motor car or in trailer attached to a motor car or the personal luggage of passengers travelling in the vehicle. On analysing the above definition, it can be observed that under Motor Vehicles Act, goods includes money and consequently, all cash carry vans of the applicant are considered as 'goods carriage' Therefore, though there is expre ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r the above provision, input tax credit is available in respect of motor vehicles and other conveyances when they are used for transportation of 'goods'. Such transportation of goods may not be a taxable supply. In fact, the transportation of goods may be done once in the life cycle of the motor vehicle. However, as long as such motor vehicle is used for transportation of goods, input tax credit is available. 8) In the present case, the applicant provides various services including the following wherein dedicated fabricated vehicles i.e. cash carry vans are used for transportation of money and also other valuable items (including gold) such as: - Cash pick-up and cash Deliveries; - Cash Van Hire Services; - RBI Coins Transportation, - Secured Cash Vaulting as per RBI guidelines; - Bullion Management Extract of one such sample agreement between the applicant and Decium Financial Ltd. dated 16 August, 2016 (which is in operation till date) providing scope of services which includes bullion management, is attached herewith for your ready reference as Annexure 'C' , There is no dispute to the fact that gold and silver are nothing but ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... yats, Members of Municipalities and Members of other local authorities; (b) the duties performed by any person who holds any post in pursuance of the provisions of the Constitution in that capacity; or (c) the duties performed by any person as a Chairperson or a Member or a Director in a body established by the Central Government or a State Government or local authority and who is not deemed as an employee before the commencement of this clause. (iv) Services of funeral, burial, crematorium or mortuary including transportation of the deceased. (v) Sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building. (vi) Actionable claims, other than lottery, betting and gambling. Accordingly the activity of supply of scrap shall be covered under scope of the supply and shall be taxable at appropriate rate. Depending upon the type of sale of motor vehicles, the GST rate would be applicable:- (i) If the motor vehicles are sold as 'old and used motor vehicles' then the rate of CGST would be applicable as referred under Notification No.01/2017-Central Tax (Rate) and 1/2017- Integrated Tax(Rate) depending upon under which Sch ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hearing and a request was made to make a further submission. The same has been tendered. None was present on behalf of the concerned officer from the Central Tax Office. However, a written submission has been furnished. 05. OBSERVATIONS We have gone through the facts of the case. Lt has been informed thus - The applicant is having cash management network pan India. Such transportation of cash is done through security vans popularly known as cash carry vans. The applicant purchases raw motor vehicles and with the requisite fabrications, gets it converted to cash carry vans. For this purpose, the applicant purchases motor vehicles and pays GST and also pays GST on fabrication. While purchasing cash carry vans under pre-GST era, the applicant had paid Central Excise Duty as well as Value Added tax. When these vans cannot be used further, the applicant sells these motor vehicles as scrap. In certain cases, instead of purchasing motor vehicles, the applicant prefers to hire these motor vehicles. We begin to discuss the facts and the questions posed. Question 1 Whether supply of such motor vehicles as scrap after its usage can be treat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pression 'supply' covers supply of goods such as sale or disposal made for a consideration. Section 7, further, says that the supply has to be in the course or furtherance of business. With regard to this, we see that the applicant is in the business of having a cash management network involving transportation of cash, The disposal of the cash carrying vans is a transaction in connection with or incidental or ancillary to the business of having a cash management network. As and when the vehicles become scrap, they have to be disposed off and the proceeds therefrom to be identified as income for the business which is reflected in the Profit Loss Account of the business. Buying new assets and discarding the old and unusable assets is an activity in the course of carrying on of the business. Hence, we conclude that supply of such motor vehicles as scrap after its usage is an activity of 'supply' in the course or furtherance of business and such transaction would attract GST. However, we see that the applicant has referred to the following to make a claim that the impugned transaction would not be a 'supply' under the GST Act SCHEDULE I [see section 7] - A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es to be used. Further, whether the vehicles are sold as scrap and unusable OR sold as old vehicles is not found confirmed from any document. It is generally seen that there is surrender of the RTO Registration Book when the vehicles are disposed off as scrap. Hence, it needs to be ascertained as to whether the vehicles are sold as scrap. For vehicles sold as scrap which does not amount to sale of a vehicle as such, the rate of the material sold as scrap would apply. For vehicles sold as vehicles, a perusal of the notifications issued for the purposes of the GST Act reflects thus - I. Notification No.2/2017-Central/State Tax (Rate) - (as amended from time to time) enlisting the goods exempted from GST does not cover the impugned cash carrying vans. 2. Notification No.1/2017-Central/State Tax (Rate) (as amended from time to time) enlisting the goods taxable to CST at various rates - a. Schedules I to III and V to VI do not cover the impugned goods. b. Entries in Schedule IV would cover the impugned goods. 3. Notification No.1/2017-Compensation Cess (Rate) (as amended from time to time) enlisting the goods taxable to Compensation Cess under the Goods and Servic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the said Acts, the amount of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies including zero-rated supplies (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 and other conveyances except when they are used (i) for making the following taxable supplies, namely:- (A) further supply of such vehicles or conveyances ; or (B) transportation of passengers; or (C) imparting training on driving, flying, navigating such vehicles or conveyances; (ii) for transportation of goods; (6) In case of supply of capital goods or plant and machinery. on which input tax credit has been taken, the registered person shall pay an amount equal to the input lax credit taken on the said capital goods or plan,' and machinery reduced by such percentage points as may be prescribed or the tax on the transaction value of such capital goods or plant and machinery determined under section 15, whichever is higher: Provided that where refractory br ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply; (75) money means the Indian legal tender or any foreign currency, cheque, promissory note, bill of exchange, letter of credit, draft, pay order, traveller cheque, money order, postal or electronic remittance or any other instrument recognised by the Reserve Bank of India when used as a consideration to settle an obligation or exchange with Indian legal tender of another denomination but shall not include any currency that is held for its numismatic value; I find that the applicant has also mentioned that besides 'cash', the cash carry vans are also used for transport of bullion. Bullion not being excluded from the definition of goods' , there arises no Issue. However, the applicant has raised the question in terms of 'cash carry vans' and hence, cash would be the goods which would be transported. Cash here is the Indian legal tender which is 'money' and I find that 'money' has been excluded from the definition of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tions his registration certificate number and all other particulars including the statement that the goods being purchased by him are meant for being used, inter alia, in the manufacture or processing of goods for sale. Of declared goods, the selling dealer has to pay tax at the rate applicable to sale of such goods within the appropriate State.). It necessarily means that the selling dealer will collect (pass on) tax from the purchasing dealer only at the said concessional rate. The idea behind this provision is self-evident. It is to ensure that the price of the product manufactured by such purchasing dealers does not go up to the detriment of the consumers of those goods. The Parliament does not want to tax both the raw material and the finished goods at the full rate. Where the finished goods are meant for sale, the raw material utilised or consumed for the manufacture of said finished goods is taxed at the concessional rate, for the reason that the State derives revenue again by taxing the sale of the finished goods. However, it is not necessary that the finished goods are actually subjected to tax on their sale-for they may be exempted either by the Act or by a notification i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by them as raw material for producing (manufacturing) their newspapers, while all other manufacturers continued to enjoy the said benefit .. If a literal construction is adopted, it is conceded on all hands that the view taken by the Karnataka High Court is the correct one. But what the Madras and Kerala High Courts have done is to take the spirit behind the amendment of the definition of the expression goods as well as the scheme underlying entry 54 of List II read with entries 92 and 92-A of List I of the Seventh Schedule to the Constitution and hold on that basis that the expression goods occurring in the latter half of clause (b) of section 8(3) does not exclude newspapers from its purview [clause (b) of sub-section (3) : The goods referred to in clause (b) of sub-section (1) are goods of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for resale by him or subject to any rules made by the Central Government in this behalf, for use by him in the manufacture or processing of goods for sale or in mining or in the generation or distribution of electricity or any other for ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... expression the meaning assigned to it in clause (d). Ordinarily, that is so. But where the context does not permit or where the context requires otherwise, the meaning assigned to it in the said definition need not be applied. If we keep the above consideration in mind, it would be evident that the expression goods occurring in the second half of section 8(3)(b) cannot be taken to exclude newspapers from its purview. The context does not permit it. It could never have been included by Parliament. Before the said amendment, the position was: the State could not levy tax on intra-State sale of newspapers; the Parliament could but it did not and entry 92-A of List I bars the Parliament from imposing tax on inter-State sale of newspapers; as a result of the above provisions, while the newspapers were not paying any tax on their sale, they were enjoying the benefit of section 8(3)(b) read with section 8(1)(b) and paying tax only at 4 per cent on non-declared goods which they required for printing and publishing newspapers. Their position could not be worse after the amendment which would be the case if we accept the contention of the Revenue. If the contention of the Revenue is accep ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e words in a particular section. But where there is no obscurity in the language of the section, there is no scope for the application of the rule ex visceribus actus. This rule is never allowed to alter the meaning of what is of itself clear and explicit. The authorities relied upon by the High Court are, therefore, not applicable. Thus, the Hon. Courts have laid down that the context has to be seen. In the present case, money is not included in the definition of 'goods'. However as the applicant has pointed, the GST E-Way Rules in rule 138(14) refer to an Annexure which enlists the goods in respect of which no e-way bill is required to be generated. At sr. no.6 of this Annexure In column 2 about Description of Goods , one finds mention of the word currency Thus, currency is goods where the goods being transported are specified in the Annexure in rule 138(14) of the CST E-Way Rules, the transportation of which would not require the generation of e-way bill. The rule stems from section 88 of the GST Act which requires that the Government may require the person in charge of a conveyance carrying any consignment of goods of value exceeding such amount as may be spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... b-section 5(a)(ii) of section 17. Thus, the applicant would be entitled to the ITC on the purchase of the cash carry vans i.e motor vehicles used for transportation of goods, subject to the provisions of the Rules made in this regard. As per Sh. Pankaj Kumar, Member This question pertains to the eligibility to avail Input Tax Credit (ITC) on the purchase of cash carry vans which are used for the cash management business. I have seen above that the disposal of the cash carry vans as scrap vehicles is a 'supply' in the course of furtherance of business and is amenable to GST. In view thereof, the applicant queries as to whether ITC would be available on the purchase of cash carry vans which are later disposed off as scrap, For answering this, I would have to refer to the relevant provisions relating to ITC and we find thus - INPUT TAX CREDIT Section 16 - Eligibility and conditions for taking input tax credit (3) Where the registered person has claimed depreciation on the tax component of the cost of capital goods and plant and machinery under the provisions of the Income-tax Act, 1961, the input tax credit on the said tax component shall not be allow ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (a)(i)(A) is about making further supply of such vehicles or conveyances . The words further supply herein are in the nature of resale . It should be noted that it is not mentioned as being just supply of such vehicles or conveyances . The word further before the word supply has to be given its proper due. Here, the legislature intends to cover motor vehicles which are purchased for the purpose of being sold. In this category, we have the chain of the distributors/ dealers of motor vehicles who purchase from the manufacturers for the downward sale to the final customer. The use of the word further is indicative of a further supply and not such a supply as in the present case which is the disposal as a scrap and which happens after the motor vehicle has been used till its full working life. In view thereof, the impugned activity of providing cash management services not being for making a further supply of the motor vehicles would not be covered by the exception in (A) of sub-section 5(a)(i). I find that the applicant has argued that as per well-settled principle of law at first one has to apply literal interpretation and only in cases of absurd results, one has t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... y mentions that - (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 and other conveyances except when they are used (i) for making the following taxable supplies, namely:- (A) further supply of such vehicles or conveyances ; or (B) transportation of passengers; or (C) imparting training on driving, flying, navigating such vehicles or conveyances; (ii) for transportation of goods; Further, it is very clear that section 2(52) very clearly gives definition of goods which reads as under :- ( 52) goods means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply; Thus from the above definition of 'goods', it very clear that 'money' is specifically excluded from the definition of goods' and therefore in no way input tax credit in respect of motor vehicles and other conveyances as env ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of very different statute i.e. the Central Sales Tax Act,1956 wherein the issue was whether purchase and use of newsprint in Manufacture of Newspaper can be treated as not being used in manufacture of 'goods' as newspapers were kept out of definition of 'goods' under the Central Sales Tax Act. The definition of 'goods' under Central Sales Tax Act which was under consideration in the aforesaid judgment is reproduced as under - goods' includes all materials, articles, commodities and all other kinds of movable property, but does not include newspapers, actionable claims, stocks, shares and securities. Thus the issue before the Hon' ble Supreme Court was whether newspaper manufactured from newsprint would be 'goods' or not as a new product 'newspaper' was manufactured. Thus there is no denying that newspapers are goods but were excluded from 'goods' under the Central Sales Tax only with a view to ensure that there is no Sales Tax liability on sale of newspapers. Thus, the context in the case law as referred is totally different and there was no intent to not to treat newspapers as 'goods' but the only intent w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... her conveyances except when they are used (i) for making the following taxable supplies, namely:- (A) further supply of such vehicles or conveyances ; or (B) transportation of passengers; or (C) imparting training on driving, flying, navigating such vehicles or conveyances; (ii) for transportation of goods; And therefore, transportation of money is not covered in section 17(5)(a) (ii) of the GST Act and the applicant is not eligible for availing input tax credit in respect of motor vehicles used in transport of money. 06. In view of the detailed deliberations held hereinabove, it is ordered thus - ORDER (under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) NO.GST-ARA-08/2017/B-11 Mumbai, dt. 19/03/2018 For reasons as discussed in the body of the order, the questions are answered thus - Question 1 Whether supply of such motor vehicles as scrap after its usage can be treated as 'supply' in the course or furtherance of business and whether such transaction would attract GST? If yes, please provide the rate of GST and/or Compensation Cess. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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