2024 (7) TMI 1238 - AAR - GST

ITC on motor vehicle leasing for women employee transportation available when mandated by law from notification date

In Re: M/s. CMA CGM Global Business Services (India) Private Limited (Formerly known as CMA CGM Shared Service Centre (India) Pvt. Ltd.)

The AAR TN ruled that ITC on leasing/renting motor vehicles for women employee transportation is available when mandated by law. The applicant can claim ... Input Tax Credit - tax paid on 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 - can entire ITC be availed by the applicant for providing the transport facility in all shifts considering the safety of women as mandated under the Tamil Nadu Shops and Establishment Act, 1947? - can ITC be availed for services received from the date of introduction of proviso to Section 17 (5) (b) (iii) of CGST Act, 2017 for the periods up to March 2022?. In the facts and circumstances of the case, whether tax paid on 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 is eligible to be availed 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 Establishments Act, 1947 subject to satisfying and fulfilling the eligibility and conditions provided under Section 16 of the CGST Act, 2017. If eligible, can entire ITC be availed by the applicant for providing the transport facility in all shifts considering the safety of women as mandated under the Tamil Nadu Shops and Establishment Act, 1947? - HELD THAT:- The 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 and the same becomes eligible for availment as per the proviso to the said sub-section which 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. Hence, in the instant case the 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 leaving workplace between 8.00 P.M to 6.00 A.M. as the same has been made obligatory vide the Notification of Government of Tamil Nadu. 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 for the periods up to March 2022? - HELD THAT:- The input tax credit on leasing, renting or hiring of motor vehicles shall be available to the applicant from 28.05.2019 onwards, i.e the date of notification issued by the Government of Tamil Nadu vide which it was made obligatory on the part of the employers to provide transportation facilities to women employees working in shifts even though the provisions of Section 17 (5) (b) was substituted vide notification no 02/2019 dated 29.01.2019 and the same came to effect from 01.02.2019. It is also reiterated that the said availment of input tax credit shall be subject to satisfying and fulfilling the eligibility and conditions provided under Section 16 of the CGST Act, 2017. A circular is only clarificatory in nature and not a legislation. Whereas a notification is issued to 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. Issues Involved:1. Eligibility of Input Tax Credit (ITC) on services of leasing/renting/hiring of motor vehicles for transportation of women employees.2. Availability of ITC for all shifts.3. ITC eligibility for services received from the date of introduction of the proviso to Section 17(5)(b)(iii) of CGST Act, 2017, up to March 2022.Issue-Wise Detailed Analysis:1. Eligibility of ITC on Services for Transportation of Women Employees:The applicant, a company in the ITes sector, provides transportation facilities to women employees as mandated by the Tamil Nadu Shops and Establishments Act, 1947. The applicant sought clarity on the eligibility of ITC on tax paid for leasing/renting/hiring motor vehicles for this purpose. Section 17(5)(b) of the CGST Act, 2017, generally blocks ITC on leasing, renting, or hiring of motor vehicles. However, a proviso allows ITC where it is obligatory for an employer to provide such services under any law. The CBIC Circular No. 172/04/2022 clarified that this proviso applies to the entire clause (b) of Section 17(5). Given the statutory obligation under the Tamil Nadu Act, the applicant is eligible to avail ITC on these services, subject to conditions under Section 16 of the CGST Act, 2017.2. Availability of ITC for All Shifts:The applicant inquired if ITC could be availed for providing transportation facilities in all shifts. The ruling clarified that ITC is available only for services provided to women employees working between 8:00 PM and 6:00 AM, as mandated by the Tamil Nadu Shops and Establishments Act, 1947. The ITC on services for other shifts remains blocked under Section 17(5)(b) of the CGST Act, 2017.3. ITC Eligibility for Services from the Date of Proviso Introduction:The applicant sought to avail ITC from the date of the proviso's introduction on 01.02.2019. The ruling noted that while the proviso was effective from 01.02.2019, the Tamil Nadu Government's notification mandating transportation facilities for women employees was dated 28.05.2019. Therefore, ITC is available from 28.05.2019 onwards, subject to compliance with Section 16 of the CGST Act, 2017. The applicant's argument to avail ITC for periods prior to this date based on procedural grounds was not accepted, as circulars are clarificatory and not legislative.Ruling:1. The applicant is eligible to avail ITC on leasing/renting/hiring of motor vehicles for transportation facilities to ensure the safety and security of women employees as per the Tamil Nadu Shops and Establishments Act, 1947, subject to Section 16 of the CGST Act, 2017.2. ITC is available only for services provided to women employees working between 8:00 PM and 6:00 AM.3. ITC on leasing, renting, or hiring of motor vehicles is available from 28.05.2019 onwards, subject to fulfilling the conditions under Section 16 of the CGST Act, 2017.