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TMI Blog2021 (12) TMI 214X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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. 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:- As per clause 1 of the said Schedule-III, services by an employee to the employer in the course of or in relation to his employment shall be treated neither as a supply of goods nor a supply of services. Since the applicant is not supplying any services to its employees, in view of Schedule III mentioned above, it is held that GST is not applicable on the nominal amounts recovered by Applicants from their employees in the subject case. Restriction of ITC to the extent of cost borne by the Applicant - HELD THAT:- The issue has already been settled by the Hon'ble High Court of Bombay in the case of CCE, NAGPUR VERSUS ULTRATECH CEMENT LTD., [ 2010 (10) TMI 13 - BOMBAY HIGH COURT] wherein the Hon'ble High Court has held that although the assessee is entitled for input service credit for the manufacturing of fin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... loyee. Further, the difference between amount paid to transport service provider for hiring bus/motor vehicle and amount recovered from employees is cost to company (5) The facilities provided by the Applicant to its employees like transportation facilities etc. are having a direct nexus with the business activities of the Applicant and the said activities are not undertaken merely for the benefit of employees since the said facilities are made available so long as the employees are in the Applicant's employment. In other words, once the employee ceases to be in employment with the Applicant, he/she is not authorized to use the transportation facility i.e. the employer-employee relationship is must to avail this facility. Thus, the expenses incurred by the Applicant like leasing, renting or hiring of motor vehicles etc. for transportation of its employees to from the workplace (Noida) are used or intended to be used by the Applicant in the course or furtherance of his business. Also, w. e. f. 01.02.2019, Section 17(5)(b)(i) of the CGST Act has been amended by virtue of the CGST Amendment Act, 2018, to block ITC only on leasing, renting or hiring of motor vehicles having ap ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct nexus with the business activities of the Applicant as the said facilities are made available as long as the employees are in the Applicant' employment. It can also be said that there exists no intention of supplying such services by the Applicant in the literal as well as intentional meaning of the term. Instead, these represent expense for the employer wherein employee is the user/ beneficiary. Accordingly, going by the purposive interpretation of the phrase 'supply of goods or services or both' given under Section 7, the provision of transportation facility would not be covered under the said phrase. Thus, no GST would be leviable on such expenses. It is further submitted that the amount recovered, if any, by the Applicant from its employees does not amount to 'consideration' in terms of Section 2(28) of the CGST Act. (10) In support of the above contentions, reliance can be placed on the Advance Ruling in case of Re: M/s. Tata Motors Limited, 2020 (9) T.M.I. 352 - Authority for Advance Ruling, Maharashtra (11) the ITC on such leasing, renting or hiring of motor vehicles cannot be denied to the extent of amount recovered by the Applicant from the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... put 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 and the said amount shall be credited to the electronic credit ledger of such person. (2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless,- (a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed; (b) he has received the goods or services or both. Explanation .- For the purposes of this clause, it shall be deemed that the registered person has received the goods where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise; (c) subject to the provisions of section 41, the tax charged in respect of such supply has been actually paid to the Government, either in c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... r 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) transportation of passengers; or (C) imparting training on driving such motor vehicles: (aa) vessels and aircraft except when they are used (i) for making the following taxable supplies, namely:- (A) further supply of such vessels or aircraft; or (B) transportation of passengers: or (C) imparting training on navigating such vessels; or (D) imparting training on flying such aircraft; (ii) for transportation of goods; (ab) services of general insurance, servicing, repair and maintenance in so far as they relate to motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa) : provided that the input tax credit in respect of such services shall be available - (i) where the motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa) are used for the purposes specified therein: (ii) where received by a taxable person engaged ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 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. 13. Prior to CGST Amendment Act as mentioned in para-11, the ineligibility of ITC was for services under the head 'rent a cab'. 'Rent a cab' being a wide term included all types of motor vehicles which were hired for transportation of employees. 14. With the introduction of new provisions w.e.f. 01/02/19, ITC on renting, leasing and hiring of motor vehicles have been disallowed only for vehicles having capacity upto 13 seats. (Section 17(5)(b)(i)) 15. Thus, in our opinion, ITC can be availed on service of leasing, renting or hiring of motor vehicles under the following conditions w.e.f. 01/02/19: - The Vehicle has approved seating capacity of more than 13 pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... xtent of cost borne by the Applicant. I find that the issue has already been settled by the Hon'ble High Court of Bombay in the case of CCE Nagpur Vs. Ultratech Cement Ltd., 2010 (260) ELT 369 (Bom.) wherein the Hon'ble High Court has held that although the assessee is entitled for input service credit for the manufacturing of final product but the amount reimbursed by the employees by way of contribution is not entitled for input service credit. 20. In view of the above discussions, we, both the members unanimously rule as under; RULING Question (a) Whether ITC is available to the Applicant on GST charged by service provider on hiring of bus, having seating capacity of more than thirteen person for transportation of employees to from workplace. Answer :- ITC is available to the applicant only after 01.02.2019. Question (b) Whether GST is applicable on amount recovered by the Applicant from employees for usage of bus transportation facility. Answer :- No. Question (c) If ITC is available as per (a), whether it will be restricted to the extent of cost borne by the Applicant (employer) Answer :- Yes. 21. This ruling is valid only ..... X X X X Extracts X X X X X X X X Extracts X X X X
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