Input Tax Credit Denial on Transport Services provided to Workers.

CESTAT, Hyderabad Bench has denied claiming Input Tax Credit on the Bus Services used for Transportation of Workers from Home to the Factory / Office:

The contention of the Tribunal for rejection was;

Once the workers come into the factory their services are used in relation to the manufacture of final products. But bringing workers to the factory or providing accommodation to them outside the factory or providing any other welfare measures for the workers or their families have no nexus with the manufacture of the final products, although they are welfare measures meant for the general well-being of the workers who manufacture the goods.

Section 17(5)(b)(iii) of CGST Act 2017, block credit supports the view with the inclusion of rent-a-cab, which as per the definition includes; renting of motor cars, motor cabs, maxi cabs, mini buses, buses and all other motor vehicles which are designed to carry passengers, irrespective of its passenger carrying capacity.

Case Law:  ANDHRA ORGANICS LTD VERSUS CCT, VISAKHAPATNAM - G.S.T [2018 (8) TMI 314 - CESTAT HYDERABAD]