Input tax credit for mandatory women employee transport is allowed only for the legally required night-shift facility.

Input tax credit on leasing, renting or hiring of motor vehicles used to provide transport for women employees working in shifts is not blocked where the employer is under a legal obligation to provide that facility under law, because the proviso to section 17(5)(b) permits credit for compulsory supplies; however, the credit remains subject to the general conditions under section 16. The credit is confined to the statutory transport arrangement for women employees during the mandatory night-shift period between 8.00 p.m. and 6.00 a.m., and does not extend to the entire transport facility. It is available only from 28.05.2019, when the underlying obligation became operational, not from 01.02.2019.

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Issues: (i) Whether tax paid on leasing, renting or hiring of motor vehicles used to provide transport facility to women employees working in shifts is eligible as input tax credit; (ii) Whether the entire credit on such transport facility is available for all shifts or only for transport of women employees between 8.00 p.m. and 6.00 a.m.; (iii) Whether the credit is available from the date of introduction of the proviso to section 17(5)(b) of the GST law.

Issue (i): Whether tax paid on leasing, renting or hiring of motor vehicles used to provide transport facility to women employees working in shifts is eligible as input tax credit.

Analysis: Input tax credit on leasing, renting or hiring of motor vehicles falls within the blocked credit provision in section 17(5)(b), but the proviso permits credit where an employer is legally obliged to provide the facility under any law for the time being in force. The Government of Tamil Nadu notification made transport arrangements mandatory for women employees working in shifts, and the CBIC circular clarified that the proviso applies to the whole of clause (b). Since the facility was provided to comply with the statutory obligation, the credit is not barred, subject to satisfaction of the general conditions for availment.

Conclusion: The credit is admissible in principle and is in favour of the assessee, subject to section 16 conditions.

Issue (ii): Whether the entire credit on such transport facility is available for all shifts or only for transport of women employees between 8.00 p.m. and 6.00 a.m.

Analysis: The statutory obligation was confined to providing transport arrangements for women employees working in shifts and ensuring their safety during work between 8.00 p.m. and 6.00 a.m. The ruling limited eligibility to the portion of transportation attributable to that legally mandated arrangement and did not extend it to transport provided for all employees or to facilities beyond the mandatory scope.

Conclusion: The credit is available only to the extent of transport provided for women employees arriving at or leaving the workplace between 8.00 p.m. and 6.00 a.m., and not for the entire transport facility.

Issue (iii): Whether the credit is available from the date of introduction of the proviso to section 17(5)(b) of the GST law.

Analysis: Although the proviso to section 17(5)(b) came into force from 01.02.2019, the legal obligation under the relevant Tamil Nadu notification was treated as arising from 28.05.2019. The credit was therefore held available only from that date, and even then it remained subject to the time-limit and other conditions under section 16.

Conclusion: The credit is available from 28.05.2019 onwards, not from 01.02.2019.

Final Conclusion: The ruling recognises eligibility of input tax credit for statutorily mandated transport for women employees, but confines it to the compulsory night-shift transport and limits its commencement to the date from which the underlying statutory obligation was operational.

Ratio Decidendi: When a supply otherwise falling within blocked credit is made obligatory by law for an employer, the proviso to section 17(5)(b) permits input tax credit, but only to the extent of the statutory obligation and subject to the general conditions and time limits governing availment of credit.

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