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TMI Blog2020 (9) TMI 352X X X X Extracts X X X X X X X X Extracts X X X X ..... 9 vide Notification No. 02/2019 - C.T.- 2019 dated 29.01.2019. It is clear and apparent that Section 17 (5) had clearly debarred Input Tax Credit on motor vehicles or conveyances used in transport of passengers till the date of the amendment i.e. 01.12.2019. However with effect from 01.12.2019, Input Tax Credit has been allowed on leasing, renting or hiring of motor vehicles, for transportation of persons, having approved seating capacity of more than thirteen persons (including the driver) - in the subject case, since the applicant has specifically submitted and as agreed by the jurisdictional officer, that they are using motor vehicles having approved seating capacity of more than thirteen persons (including the driver), the applicant shall be eligible for Input Tax Credit in this case. Whether GST is applicable on nominal amount recovered by Applicants from their employees for usage of employee bus transportation facility in non-air conditioned bus? - HELD THAT:- Schedule III to the CGST Act which lists activities which shall be treated neither as a supply of goods nor a supply of services As per clause 1 of the said Schedule-III, Services by an employee to the employer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct and MGST Act. FACTS AND CONTENTION - AS PER THE APPLICANT The submissions made by the applicant are as follows:- Applicant has engaged service providers to provide transportation facility to its employees, in non-air conditioned buses having seating capacity of more than 13 person. Sr. No. 15 (b) of Notification No. 12/2017-C.T. (Rate) dated 28.06.2017 exempts service provided for transport of passengers, with or without accompanied belongings, by non-air-conditioned contract carriage other than radio taxi, for transportation of passengers, excluding tourism, conducted tour, charter or hire . Service providers are having contract carriage permit issued by the relevant regulator) authorities in respect of buses deployed for employee transportation service. 2.2 Section 17(5)(b)(i) of the CGST Act, 2017 has been amended, w. c.f. 01.02.2019, to block ITC on leasing, renting or hiring of motor vehicles having approved seating capacity of not more than 13 persons. Hence ITC is allowed on leasing, renting or hiring of motor vehicles having seating capacity of more than 13 person. 2.3 To ensure use of transportation facility only by authorized persons/employees, Ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under a contract, whether express or implied, for the use of such vehicle as a whole for the carriage of passengers mentioned therein and entered into by a person with a holder of a permit in relation to such vehicle or any person authorized by him in this behalf on a fixed or an agreed rate or sum (a) On a time basis, whether or not with reference to any route or distance, or (b) from one point to another; And in either case, without stopping to pick up or set down passengers not included in the contract anywhere during the journey, And includes (i) a Maxicab; and (ii) a motor cab notwithstanding that separate fares are charged for its passengers 2.11 Thus, in order to take benefit of SI. 15 (b) of the exemption Notification No. 12/2017-Central Tax (Rate) dated 28.06.2017. a) Service is provided for transportation of passengers; b) By a non-air-conditioned contract carriage c) The vehicle should have a contract carriage permit under the Motor Vehicle Act; d) Requirements under Section 2(7) of the Motor Vehicles Act should be fulfilled and e) The transportation should not be for the purpose of tourism, condu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es and the applicant s case is similar. 3.3 The following requirements should be met for availment of input tax credit. a) The vehicle has approved seating capacity of more than 13 persons (including driver). b) The service of leasing, renting or hiring is used for furtherance of business as per Section 16(1) of the CGST Act, 217. c) The service provider furnishes invoice as per Section 31 and Rule 46 of the CGST Act the CGST Rules, respectively. d) All other conditions as prescribed under Section 16(2) are complied. 3.4 The jurisdictional officer has cited various judicial decisions along with the decision made by the Hon ble Court in Commr. Or. Ex., Chandigarh-II v. Federal Mogul Goetze (India) Ltd, 2015 (39) S.T.R. 735 (P H) = 2011 (9) TMI 120 - PUNJAB AND HARYANA HIGH COURT, as well as the Karnataka High Court decision in Commr. of C. Ex., Bangalore-II v. Stanzen Toyotetsu India (P) Ltd. 2011 (23) S.T.R. 444 (Kar.) = 2011 (4) TMI 201 - KARNATAKA HIGH COURT and submitted that input tax credit is available to the applicant in the instant case. 3.7 In subject case of transaction between Applicant and its employees, where Applicant recov ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al Officer was not present. 4.2 The application was admitted and called for final hearing on 17.12.2019. Shri Rajesh Shukla, Head, Indirect Tax, appeared along with Shri Mukesh Dokania, Dy. General Manager (Indirect Taxation). Authorized Representative, made oral and written submissions. Jurisdictional Officer was not present but made written submissions. We heard both the sides. 05. DISCUSSIONS AND FINDINGS: 5.1 We have gone through the facts of the case. documents on record and submissions made by both, the applicant as well as the jurisdictional office. 5.2 Applicant had submitted that they have engaged a service provider to provide bus transportation facility to its employees in non-air conditioned bus having seating capacity of more than 13 person. The first question raised by them is whether they are entitled to avail ITC of the GST paid to such service providers. 5.2.1 To answer the question whether applicant is entitled to avail Input tax credit (ITC) of GST charged on such inward supply as in the subject case. we refer to the provisions of Chapter V of the CGST Act, 2017 comprising of Sections 16 to 21. 5.2.2 Section 16 of the CGST Act. 2017, contains ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly; (ii) membership of a club. health and fitness centre; (iii) rent-a-cab, life insurance and health insurance except where (A) the Government notifies the services which are obligatory for an employer to provide to its employees under any law for the time being in force; or (B) such inward supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as part of a taxable composite or mixed supply. 5.2.5 Vide the aforesaid amendment, Clauses (a) and (b) have been replaced with Clauses (a), (aa), (ab) and (b) and the amended Section 17 (5) (d) reads as under:- 17 (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) transportat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the date of the amendment i.e. 01.12.2019. However with effect from 01.12.2019, Input Tax Credit has been allowed on leasing, renting or hiring of motor vehicles, for transportation of persons, having approved seating capacity of more than thirteen persons (including the driver), 5.2.7 Therefore in the subject case, since the applicant has specifically submitted and as agreed by the jurisdictional officer, that they are using motor vehicles having approved seating capacity of more than thirteen persons (including the driver), the applicant shall be eligible for Input Tax Credit in this case. However we would like to make it very clear that if the motor vehicle hired by them does not have an approved seating capacity of more than thirteen persons (including the driver), then in that case the applicant will not be eligible for Input Tax Credit. 5.3 The second question raised by the applicant is whether GST is applicable on nominal amount recovered by Applicants from their employees for usage of employee bus transportation facility in non-air conditioned bus. 5.3.1 Applicant has submitted that they issue pass only to their employees, so that the transportation facility can be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed by both, the applicant as well as the jurisdictional officer. 06. In vie w of the extensive deliberations as held hereinabove, we pass an order as follows: 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-23/2019-20/B-46 Mumbai, dt. 25-08-2020 For reasons as discussed in the body of the order, the questions are answered thus -- Question: -1. Whether input tax credit (ITC) is available to Applicant on GST charged by service provider on hiring of bus/motor vehicle having seating capacity of more than thirteen person for transportation of employees to from workplace? Answer: - ITC is available to the applicant but only after 01.02.2019. Question:-2. Whether GST is applicable on nominal amount recovered by Applicants from employees for usage of employee bus transportation facility in non-air conditioned bus? Answer: - Answered in the negative. Question: -3. If ITC is available as per question no. (1) above, whether it will be restricted to the extent of cost borne by the Applicant (employer)? Answer: - Answered in the affirmative. - ..... X X X X Extracts X X X X X X X X Extracts X X X X
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