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TMI Blog2023 (8) TMI 1205X X X X Extracts X X X X X X X X Extracts X X X X ..... he service providers that the seating capacity of the motor vehicles (including driver) is less than thirteen persons. However, it is obligatory on the part of the Applicant to provide transport facilities to women employees working beyond 8.00 PM, as per the provisions of the Tamilnadu Shops and Establishment Act, 1947 - it is clear that Section 17(5) of the CGST Act blocks input tax credit on motor vehicles used in transport of passengers up to the date of amendment ie., 01.02.2019. With effect from 01.02.2019, ITC is not allowed on leasing, renting or hiring of motor vehicles for transportation of passengers having approved seating capacity of not more than thirteen persons (including driver). The motor vehicles used by the Applicant have seating capacity of less than 13 persons, making them ineligible to avail ITC on such services. ITC is not blocked on the renting of motor vehicles to provide transport facilities to women employees working between 8.00 PM to 6.00 AM as it is obligatory for an employer to provide the same to its employees under the law for the time being in force (Tamilnadu Shops and Establishment Act, 1947) as per Section 17 (5)(b) of the CGST Act, 2017 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ect of leasing/renting/hiring of motor vehicles to provide transportation facility to women employees, is eligible to be availed as Input tax credit (ITC)? 2. If eligible, can ITC be availed for services received from the date of introduction of proviso to section 17(5)(b) (iii) of CGST Act, 2017 with effect from 1st February 2019. 2. In this regard the Applicant stated the following:- That they are a Private Limited Company engaged in rendering IT enabled support services in the health care sector to customers located outside India. Since, the entire customer base of the Applicant is located outside India with different time zones, the Applicant's operating hours consist of five shifts -8.30 AM to 5.30 PM, 9.30AM to 6.30PM, 5.30PM to 2.30AM, 6.30PM to 3.30AM AND 8.30PM to 5.30AM. That they are registered under the Tamilnadu Shops and Establishment Act, 1947 for all the places in the state of Tamilnadu. As per the Tamilnadu Shops and Establishment Act, 1947 and rules prescribed therein, it is mandatory for the Applicant to provide transportation facility for women employees working in shifts and provide for adequate protection of safety for women employees wor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Applicant has contended that, section 17(5) of the CGST Act, 2017 has been substituted as under, vide CGST (Amendment) Act, 2018.- (5) Notwithstanding anything contained in sub-section (1) of section 16 and sub-section (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) 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 ai ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Applicant has placed reliance on the decision rendered in the case of RANE TRW STEERING SYSTEM LIMITED Vs. The Commissioner of Central Excise Central Tax, Chennai outer Commissionerate, under the erstwhile CENVAT regime, wherein it was held that an activity that is mandatory under a law satisfies the substantive part of the definition input service . 3.4. Further reliance is placed on the ruling of the Authority for Advance Ruling, Gujarat pronounced for M/s. Troikka Pharmaceuticals Limited, wherein it was held that ITC of the GST paid on canteen charges is available to the applicant on the food supplied to the employees of the applicant company as it is mandatory under Section 46 of the Factories Act to provide canteen facility to the employees . Further, in the said ruling it was stipulated that for eligibility of ITC on GST paid for canteen facility, the burden of GST should not have been passed on to the employees of the Company. 3.5. Thus, the Applicant's view is that the GST paid on transportation facility with adequate safety measures provided to women employees as per statutory requirement would be eligible to be availed as ITC. 4.1. The State jurisdic ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transport facilities to the employees. In terms of the agreement, the service provider is the owner of commercial vehicles and has offered to provide such vehicles on rental/ lease basis to the company, for transporting the company's employees or associates, visitors, guests, representatives etc., as may be directed by the company. 6.3.2. As set out in the agreement, the service provider shall be leasing out vehicles on a monthly rental basis along with driver and the rental amount includes all costs that cover all taxes, rates and duties. The service provider shall raise an invoice on monthly basis for the services rendered in a particular month. The invoices issued may be supported by detailed documentation to substantiate the total costs and expenses charged by the service provider to the company. 6.3.3. As per Annexure -II to the agreement, motor vehicles such as Tavera, Sumo with seating capacity of 8+1 and Tempo Traveller 12+1 seater were provided and the invoice issued by the service provider also contains these vehicles in the description. The invoices issued by the other service provider namely M/s. Ginosys, Chennai also evidences usage of Sumo and tempo travell ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hicles, vessels or aircraft; or (II) in the supply of general insurance services in respect of such motor vehicles, vessels or aircraft insured by him (b) the following supply of goods or services or both,- (i) food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, leasing, renting or hiring of motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa) except when used for the purposes specified therein, life insurance and health insurance: Provided that the input tax credit in respect of such goods or services or both shall be available where an inward supply of such goods or services or both is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply; (i) membership of a club, health and fitness centre; and (ii) travel benefits extended to employees on vacation such as leave or home travel concession: Provided that the input tax credit in respect of such goods or services or both shall be available, where it is obligatory for an employer to provide the same to its emp ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the invoices issued by the service providers that the seating capacity of the motor vehicles (including driver) is less than thirteen persons. However, it is obligatory on the part of the Applicant to provide transport facilities to women employees working beyond 8.00 PM, as per the provisions of the Tamilnadu Shops and Establishment Act, 1947. The initial Notification dated 28.05.2019 issued in this regard, where the relevant provisions of the said Act is as under;- (6) Women employees shall not be required to work beyond 8.00PM on any day in normal circumstances. Provided that the employer after obtaining written consent of the women employees, shall allow them to work between 8.00 PM and 6.00 AM, subject to providing adequate protection of their dignity, honour and safety. (7) Transport arrangements shall be provided to the women employees who work in shifts. A notice to this effect shall be exhibited at the main entrance of the establishment indicating the availability of transport 6.6.1. From the above facts, it is clear that Section 17(5) of the CGST Act blocks input tax credit on motor vehicles used in transport of passengers up to the date of amendment ie., 0 ..... X X X X Extracts X X X X X X X X Extracts X X X X
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