Whether
tax paid on input services in respect of leasing/renting/hiring of motor
vehicles to provide transportation facility to women employees, is eligible to
be availed as Input tax credit (ITC)
Authority For Advance Ruling –
Tamilnadu
Advance Ruling No. 14/ARA/2023 Dated: 15.06.2023
Name Of Applicant: M/s Access Healthcare Services Private
Limited
A. Relevant
Sections/Rules & Notification/Circulars on the Subject:
·
Section 16 of the CGST
Act
·
Section 17(5) of the
CGST Act
·
Section 18 of the CGST
Act
B. Facts
and contentions submitted by applicant:
·
The applicant is 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 working between
8.00 PM to 6.00 AM.
·
That the Applicant has
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 basis or on payment of consideration to supplier where the supplier
has raised invoice on forward charge basis
·
the 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:-
·
further supply of such
motor vehicles; or
·
transportation of
passengers; or
·
imparting training on
driving such motor vehicles;
(aa)
vessels and aircraft except when they are used-
(i)
for making the following taxable supplies, namely:-
·
further supply of such
vessels or aircraft; or
·
transportation of
passengers; or
·
imparting training on
navigating such vessels; or
·
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-
where
the motor vehicles, vessels or aircraft referred to in clause (a) or clause
(aa) are used for the purposes specified therein;
where
received by a taxable person engaged-
§ in
the manufacture of such motor vehicles, vessels or aircraft; or
§ 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-
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;
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.
·
The Applicanthave
entered into an agreement with the service provider M/s. New Kannan Travel
Lines India (P) Ltd., for providing 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.
·
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.
·
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
C. Question
Raised Before AAR:
·
Whether tax paid on
input services in respect of leasing/renting/hiring of motor vehicles to
provide transportation facility to women employees, is eligible to be availed
as Input tax credit (ITC)?
·
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.
D. Discussion
and Findings of the Authority:
·
We have carefully
examined the statement of facts, supporting documents filed by the Applicant
and the additional submissions made during the hearing. 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). As already
discussed, the motor vehicles used by the Applicant have seating capacity of
less than 13 persons, making them ineligible to avail ITC on such services
·
We find that the nature
of business of the Applicant necessitates them to deploy women employees beyond
8.00 pm. Though, the seating capacity of the motorvehicles used for
transportation of passengers in the case of the applicant is less than thirteen
persons, there is a mandate to the applicant to provide transport facilities to
women employees working beyond 8.00 PM, as stipulated in the Tamilnadu Shops
and Establishments Act as per the Notification dated 28.05.2019 issued in this
regard. The date of the said Notification is 28.05.2019 and hence the second
proviso to the said Section is satisfied only from 28.05.2019
·
Therefore, we find that
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 only from 28.05.2019, which is the
date of the Notification issued by the Tamil Nadu Government in this regard
E. Ruling
by AAR:
·
The applicant is
entitled to avail ITC on the tax paid towards leasing/renting/hiring of motor
vehicles for providing transport facilities to women employees alone, who are
arriving or leaving workplace between 8.00 p.m to 6.00 a.m.
·
ITC can be availed with
effect from 28.05.2019 subject to the provisions of Section 16 of the CGST/
TNGST Act, 2017.
Disclaimer:
All the Information is based on the notification, circular and order issued by
the Govt. authority and
judgement delivered by the court or the authority information is strictly for
educational purposes and on the
basis of our best understanding of laws & not binding on anyone.
