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TMI Blog2021 (12) TMI 884X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 considera ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... visions 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. - TN/43/ARA/2021 - - - Dated:- 30-11-2021 - SHRI T.G. VENKATESH, I.R.S., AND TMT K. LATHA., M.SC., (AGRI), MEMBER, Note: Any appeal against the Advance Ruling order shall be filed before the Tamil Nadu State Appellate Authority for Advance Ruling, Chennai under Sub-section (1) of Section 100 of CGST ACT/TNGST Act 2017 within 30 days from the date on which the ruling sought to be appealed against is communicated. At the outset, we would like to make it clear that the provisions of both the Central Goods and Service Tax Act and the Tamil Nadu Goods and Service Tax Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Service Tax Act would also mean a reference to the same provisions under the Tamil Nadu Goods and Service Tax Act. M/s. New Pandian Travels Private Limited, No. 1078-B, 19th Main Road First Block, Anna nagar, Chennai. 600 040 (hereinafter called the Applicant) is registered under the GST Vide GSTIN 33AADCN69 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... used for exempted supplies. The Applicant supply 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 which is deemed as taxable supply and hence avails ITC. 2.2 The applicant has stated that Section 17(5)(a) provides that ITC is blocked on 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) transportation of passengers; or (C) imparting training on driving such motor vehicles Section: 17(5)(a)(A) permits ITC where the Motor Vehicle of capacity up to 13 persons is used for further supply of such Motor vehicles. Providing Motor Vehicle on Lease or Hire or rental basis is a 'supply' within the scope of 'Supply' u/s 7(1) (a) of CGST Act, 2017, since the term 'supply' includes all forms of supply of goods or services or both such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consider ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or availment of input tax credit on motor vehicle for the Tax paid by it while acquiring the said vehicles. Further the Ruling said it is necessary to mention here that the cars, which the applicant intends to lease, or has already leased, should be registered with the transport authority in the capacity of commercial use. In case the vehicle is owned and used by the Applicant for his own use, the facility of ITC shall seize to be available to them. 2.4 The applicant has further stated that Classification of services and SAC are for determining the Tariff rate of tax and not for any other purpose.; Section 17(5)(a) is not based on SAC and not using any words verbatim of SAC description. The three Judges Bench of Hon'ble Supreme Court of India in the case of Commissioner v. Sandan Vikas (I) Ltd., held that Rules of Interpretation of the Central Excise Tariff may not be applicable if the notification (exemption notification) commands and require a different understanding. Holding that rules or principles of interpretation are always subject to context and are not binding commands. Therefore, SAC cannot be the basis for allowing ITC on 'Motor vehicles' and ITC entit ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicant consented and the hearing for the admission of the application was held on 05.10.2021. The Authorised representative, Shri. S.Natarajan, Cost Accountant, appeared for the hearing virtually and reiterated their submissions. He stated that the applicant supplies cars to corporate clients such as TCS, by leasing the motor vehicles. They are leasing out vehicles with seating capacity of less than 8s above 13 passengers. The applicant was asked to submit copies of agreement covering both DTA 8s SEZ units, invoice copies, Documents for renting to SEZ. The applicant was asked whether the Motor cars are capitalized in their book of accounts, to which the Authorised representative replied that Motor Cars are capitalized in their book of accounts excluding the GST element. 3.2 In pursuance of the virtual personal hearing aforesaid, the applicants submitted the following documents as instructed by the members of the authority:- 1. Photo copy of Staff Transport services agreement entered between M/s New Pandian Travels Private Limited and M/s Fidelity Business Services India Private Limited operating in SEZ. 2. Sample Invoice copies (Two Nos.) raised in the name of Fidel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. Section 17(5)(a)(B) 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 uses them to provide supply of transportation of passengers. The applicant in this case provides supply of renting cabs and motor vehicles classified under SAC 996601 (as stated by the applicant). There is a difference between supply of transportation of passengers (classified under SAC 9964) and renting of motor vehicles (classified under SAC 9966). Even though the motor vehicle is eventually used for the transp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicant has stated to be engaged in transporting passengers as a Rent-a-cab operator by providing the Motor Vehicle on hire or rental basis. The applicant has sought ruling on the following questions:- 1. Whether the GST paid on the Motor cars of seating capacity not exceeding 13 (including Driver) leased or rented to customers will be available to it as INPUT TAX CREDIR (ITC) in terms of Section 17(5)(a)(A) of Central Goods and Service Tax Act, 2017? 2. Whether the GST paid on the 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 will be available to it as INPUT TAX CREDIT (ITC) in terms of Section 17(5)(a)(B) of Central Goods and Service Tax Act, 2017. 3. 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 and whether ITC is admissible on Motor Vehicles procured and used commonly for such supply to SEZ and other than SEZ supplies? The above questions are on the admissibility t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 19 is made a part of the Master Services Agreement,- Services as per Work Order effective 26th July 2019 in respect of Amazon is that the applicant is to provide 'Staff Transport' related services as described under Schedule 1 and 2 of the Agreement, Description of Scope of Work in Schedule-I is that the applicant has to provide minimum fleet of 150 vehicles of specified conditions to transport Amazon Associates from their home or Nodal points to the Amazon business premises and to any other location as Amazon may desire. The payment for the service provided is based on a 'Fixed Monthly Packaged Model', wherein a fixed amount for 1500Km/ 12 hrs for a month and additional charges for Extra KM/Extra Hour is agreed Description of Scope of Work in Schedule-II is that the applicant has to provide a fleet of vehicles of specified conditions to transport Amazon Associates from their home or Nodal points to the Amazon business premises and to any other location as Amazon may desire. The payment for the service provided is based on a 'Trip based Model' wherein payment is slab-based rates depending on the diesel price, Kms and Hours. The invoice i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. The applicant is responsible for supplying the services of 'Rent-a -cab', wherein the vehicle with the driver is supplied to the Vendor, who uses such services received from the applicants for the transporting requirement of their staff/officers/ Associates. The intention of any agreement is to be understood by reading the entire agreement, as held by the Hon'ble Supreme Court. Thus, 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplied i.e., the activity of the applicant is that he uses the vehicles bought by him for supplying services of hiring of such vehicles with the operators under his Payroll/responsibility and the supply is not a 'further supply of such motor vehicles' per-se. From the above, 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 and Q.No. 1 is answered in Negative. 8.3 The exception provided at S. 17(5)(a)(B) is that the ITC is respect of Motor vehicles having approved seating capacity of not more than thirteen persons are available when they are used for making the taxable supplies of 'transport ..... X X X X Extracts X X X X X X X X Extracts X X X X
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