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TMI Blog2024 (7) TMI 1238X X X X Extracts X X X X X X X X Extracts X X X X ..... iled as input tax credit (ITC)? - HELD THAT:- Input tax credit on services of leasing, renting or hiring of motor vehicles shall not be available as the same falls under the category of blocked credit. However, the proviso to the said sub-section provides 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 employees under any law for the time being in force - Further it is seen that CBIC vide circular No. 172/04/2022 dated 06.07.2022, issued by the Ministry of Finance wherein it was clarified that the proviso after sub-clause (iii) of clause (b) of sub-section (5) of section 17 of the CGST Act is applicable to the whole of clause (b) of sub-section (5) of section 17 of the CGST Act. In view of the foregoing provisions of the CGST Act, 2017, CBIC Circular dated 22.07.2022 and Notification of the Government of Tamil Nadu dated 02.06.2022, it is found that the applicant is eligible to avail input Services in respect of leasing/renting/hiring of motor vehicles to provide transportation facility to ensure safety and security of women employees as per Tamil Nadu Shops and Establishmen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... case until the issuance of Circular more clarity was awaited on the eligibility of ITC and the ambiguity has been removed altogether only after issuance of the said circular and hence the benefit of ITC cannot be denied on procedural grounds without any fault on the part of the Applicant is not in consonance with the provisions of the GST law. - SMT. D. JAYAPRIYA AND SMT. A. VALLI, MEMBER 1. Any appeal against this Advance Ruling order shall lie before the Tamilnadu State Appellate Authority for Advance Ruling, Chennai under Sub-Section (1) of Section 100 of CGST Act 2017/ TNGST Act 2017, within 30 days from the date on the ruling sought to be appealed, is communicated. 2. In terms of Section 103 (1) of the Act, Advance Ruling pronounced by the Authority under Chapter XVII of the Act shall be binding only- (a) on the applicant who had sought it in respect of any matter referred to in sub-section (2) of Section 97 for advance ruling. (b) on the concerned officer or the jurisdictional officer in respect of the applicant. 3. In terms of Section 103 (2) of the Act, this advance ruling shall be binding unless the law, facts or circumstances supporting the original advance ruling have ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The Applicant submitted that they strive to ensure diversity in employment opportunities and promotes participation of women in the workforce by providing necessary concessions and amenities and the nature of services being rendered to the customer base outside India with different time zones necessitates the applicant to operate in various shifts throughout the day. 3.5. The Applicant submitted that they are registered under the Tamil Nadu Shops and Establishment Act, 1947 for all the places of business located in Tamil Nadu. That as per the Tamil Nadu Shops and Establishment, 1947 read with the relevant rules and notifications prescribed therein, it is mandatory for the Applicant to provide transportation facility for woman employees working in shifts and provide for adequate protection of safety for women employees (hereinafter referred to as said statutory requirement ). The Applicant submitted that the relevant extract of the notification (G.O Ms No. 61, Labour Welfare and Skill Development Department (K2) dated 02 June 2022) issued by the government of Tamil Nadu under the said act is as follows:- Para 6 of the Notification: Women employees shall not be required to work beyon ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ablishment Act, 1947 mentioned above, wherein it is necessary to provide transportation facility with adequate safety for women employees working in shifts. 3.9. The applicant submitted that no recovery of costs is made by them from the employees for transportation facilities provided to them and adequate documentation and record are maintained in connection with the costs incurred for each trip, the details of employees who were part of the trip as well as the location of pick up and drop for each employee. 3.10. The Applicant submitted that they have been receiving services of leasing/hiring/renting of motor vehicles for transportation of employees and paid tax on the same, either on reverse charge mechanism (RM) basis or on payment of consideration to supplier (where the supplier has raised invoice on forward charge baris). The Applicant submitted that with effect from 01 February 2019, a proviso after Section 17 (5) (b) (i) of CGST Act, 2017 and TNSGST Act, 2017 was inserted which stated that 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 employees under any law for the time bei ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able to the whole of clause (b) of sub-section (5) of section 17 of the CGST Act. 3.14. The applicant submitted that the said amendment in sub-section (5) of section 17 of the CGST Act was made based on the recommendations of GST Council in its 28th meeting held on 21.07.2018. That the intent of the said amendment in sub-section (5) of section 17, as recommended by the GST Council in its 28th meeting held on 21.07.2018, was made known to the trade and industry through the Press Note on Recommendations made during the 28th meeting of the GST Council, dated 21.07.2018. That it had been clarified that scope of input tax credit is being widened, and it would now be made available in respect of Goods or services which are obligatory for an employer to provide to its employees, under any law for the time being in force. 3.15. The applicant submitted that on perusal of the above, it is clear that when services mentioned in clause (b) of Section 17 (5) are availed by a Company for fulfilling its statutory obligation as an employer, GST paid on the same is allowable as credit and it cannot be considered as blocked credit specified under Section 17 (5). That the intention behind insertion of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... transport facilities to women employees working between 8 pm to 6am as it is obligatory for an employer to provide the same to its employees under the law for time being in force (Tamil Nadu Shops and Establishment Act 1947) as per Section 17 (5) (b) of the CGST Act 2017. 3.18. The applicant submitted that the facts and circumstances surrounding the instant case are similar to the decisions cited above. That in the instant case, it is a statutory obligation for the Applicant to provide transportation facility to women employees working in shifts with adequate security. That no recovery of cost has been made by the Applicant for provision of the said facility. 3.19. The applicant submitted that to comply with the requirement of Tamil Nadu Shops and Establishments Act, 1947 and ensure adequate security for woman employees working in various shifts it is necessary to provide transportation facility to women employees working in such shifts and ensure that a male employee or escort accompanies women employee till the point of drop. Therefore, it is the Applicant's view that the GST paid on transportation facility with adequate safety measures provided to women employees as per sta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 4. That in view of above the Applicant is of view that GST paid on transportation facility with adequate safety measures provided to women employees working in shifts would be eligible to be availed as ITC and the said ITC can be availed from the date of introduction of proviso to Section 17 (5) (b) (iii) of CGST Act, 2017 with effect from 1st February 2019. 3.25. The applicant submitted the following;- 1. Annexure-A-Notification (G.O. Ms No. 61, Labour Welfare and Skill Development Department (K2) dated 02.06.2022) issued by the Government of Tamil Nadu. 2. Annexure-B-Establishment registration certificate of the Applicant dated-13-07-2021. 3. Annexure-C-Sample copies of agreements entered with the suppliers of the said transportation service. 4. Annexure-D-The copy of relevant extract of Transport policy of the Applicant. 5. Annexure-E-Sample copy of letter of consent of women employees working in shifts vide appointment letter. 6. Annexure-F-A copy of the circular No. 172/04/2022-GST dated 06.07.2022 7. Annexure-G-Press Note on recommendations made during the 28th meeting of the GST council dated 21.07.2018. 8. Annexure-H-Copy of judgment- RANE TRW STEERING SYSTEM LTD. VERSUS TH ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ansportation of persons, having approved seating capacity of not more than thirteen persons (including the driver). However, as per the proviso to Section 17 (5) (b), ITC in respect of such goods or services or both shall be available, wherever it is obligatory for an employer to provide the same to employees under any law for the time being in force. Therefore, the ITC is not blocked on Tax paid in Input Services in respect of leasing/ renting/hiring of motor vehicles to provide transportation facility and security of women employees working between 8.00 P.M to 6.00 A.M., as it is obligatory as per Tamil Nadu Shops Establishments Act, 1947, only from 28.05.2019, which is the date of notification by the Tamil Nadu Government, in this regard and subject to the provisions of Section 16 of the CGST/ TN GST Act, 2017. In addition to the above, the state authority has submitted that no Adjudication proceedings are pending or decided against the Taxpayer, relating to the questions raised in the application for Advance Ruling. 4.4 The Joint Commissioner (ST), Intelligence-II also stated that there are no proceedings pending or decided on the issue raised in the application by the Applican ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Establishment Act, 1947 for all the places of business located in Tamil Nadu and as per the Tamil Nadu Shops and Establishment, 1947 read with the relevant rules and notifications prescribed therein, it is mandatory for the Applicant to provide transportation facility for woman employees working in shifts and provide for adequate protection of safety for women employees. The Applicant is procuring services of leasing / renting /hiring of motor vehicles for passenger transportation and provides the same to its women employees working in shifts. The applicant also submits that no recovery of costs is made by the Applicant from the employees for transportation facilities provided to them. That the Applicant adopted a position to not avail ITC for tax paid on services of leasing/hiring/renting of motor vehicles for transportation of employees till March 2022 out of abundant caution and started availing input tax credit from April 2022 onwards. We also find that, to the enquiry put-forth during the course of Personal hearing as to whether records are maintained differentiating the services of leasing / renting/ hiring of motor vehicles used exclusively for men and women employees/ staf ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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; (ii) membership of a club, health and fitness centre; and (iii) 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 employees under any law for the time being in force. 6.6. On perusal of the above provisions of Section 17 (5) of the CGST Act, 2017 we find that Input tax credit on services of leasing, renting or hiring of motor vehicles shall not be available as the same falls under the category of blocked credit. However, the proviso to the said sub-section provides 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 employees under any law for the time being in force. 6.7. Further it is seen that CBIC vide circular No. 172/ ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... levant paras are reproduced below for ease of reference;- (6) Women employees shall not be required to work beyond 8.00 P.M. 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 P.M. and 6.00 A.M. subject to providing adequate protection of their dignity, honour and safety. (7) Transport arrangements shall be provided to the employee who works in shifts. A notice to this effect shall be exhibited at the main entrance of the establishment indicating the availability of transport. 6.9. Hence, in view of the foregoing provisions of the CGST Act, 2017, CBIC Circular dated 22.07.2022 and Notification of the Government of Tamil Nadu dated 02.06.2022, we find that the applicant is eligible to avail input Services in respect of leasing/renting/hiring of motor vehicles to provide transportation facility to ensure safety and security of women employees as per Tamil Nadu Shops and Establishments Act, 1947 subject to satisfying and fulfilling the eligibility and conditions provided under Section 16 of the CGST Act, 2017. 6.10. With respect to the second query of the applicant i.e If eligible, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... bject to satisfying and fulfilling the eligibility and conditions provided under Section 16 of the CGST Act, 2017. 6.13. We find that the applicant has made the following submissions with regard to their claim that the ITC should be permitted to be availed for the prior period;- that ITC should be permitted to be availed for the period prior to F.Y 2022-23 even though the time limit for availing ITC may have elapsed as the Applicant would be at a substantial loss because GST paid on aforementioned services is a sizable amount. that the issuance of separate clarification through Circular No. 172/04/2022-GST makes it clear that ITC on goods and services procured for satisfaction of statutory obligation by an employer would be eligible from the time or introduction of said proviso that substantial benefit granted by the Act cannot be denied on procedural grounds. That ITC is a form of concession and benefit granted by the legislature to a taxpayer and Section 16 of CST Act, 2017 makes it clear that except the category of supplies notified in Section 17 of CGST Act, 2017, ITC would be eligible on tax paid on all goods or services or both received by a registered person in the course or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... notify the changes made in law or to give effect to provisions of law, a circular is issued to provide a clarification on an already existing provision of law. Hence, the applicants' submission that in the instant case until the issuance of Circular more clarity was awaited on the eligibility of ITC and the ambiguity has been removed altogether only after issuance of the said circular and hence the benefit of ITC cannot be denied on procedural grounds without any fault on the part of the Applicant is not in consonance with the provisions of the GST law. 7. In view of the above, we rule as under, RULING 1. Yes, the applicant is eligible to avail input Services in respect of leasing/renting/hiring of motor vehicles to provide transportation facility to ensure safety and security of women employees as per Tamil Nadu Shops and Establishments Act, 1947 subject to satisfying and fulfilling the eligibility and conditions provided under Section 16 of the CGST Act, 2017. 2. Input tax credit shall be available to the applicant only on the tax paid on services of leasing, renting or hiring of motor vehicles for providing transport facilities to women employees alone who are arriving or le ..... X X X X Extracts X X X X X X X X Extracts X X X X
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