ITC on Transportation Charges

[Asked by Guest]

Could we get ITC on transportation charges paid for employee pickup and droop.

[Ganeshan Kalyani]

Sir, in my view input tax credit is eligible.

[DR.MARIAPPAN GOVINDARAJAN]

If the said activity is for in the course of business it is eligible.

[KASTURI SETHI]

I agree with both experts.

[Alkesh Jani]

Sir,

This issue has been discussed at large, wherein, I expressed different point and ground which which may arise resulting to litigation matter. Few more point are as follows:-

1. The pick-up and drop of an employee by an employer is an inward supply? If yes, then Section 2(67) of CGST Act,2017 defines inward supply as “Inward supply” in relation to a person, shall mean receipt of goods or service or both whether by purchase, acquisition or any other means with or without consideration, is required to be satisfied, as the recipient of the services are employee.

2. The supply can be said to be made if consideration is collected, here employer is collecting any consideration from his employee is an important aspects.

3. The definition of conveyance is given at Section 2(34) of CGST, Act, 2017, which states that “conveyance” includes a vessel, an aircraft and a vehicle.

4. Section 17(5)(a) of the CGST, Act,2017, mentions “motor vehicles or conveyance”. Further, Section 17(5)(b)(iii) (A) of CGST, Act, 2017 states that “(A) the Government notifies the services which are obligatory for an employer to provide to its employees under any law for the time being in force;” This is required to be satisfied.

In concluding, I am of the view that, if you have satisfactory reply, for which SCN may be issued, then you may avail ITC. Lastly, I would say that “take the best and leave Rest.”

Thanks,

With Regards,

[YAGAY and SUN]

In our view the matter is disputable.

AI Summary

Input tax credit on employee transportation may be available when in course of business, subject to statutory exclusions.
ITC on employee pick-up and drop may be allowable if the transport service is provided in the course of business, but entitlement is ambiguous because of issues whether the service constitutes an inward supply to the employer, whether employees pay consideration, and the statutory exclusion for motor vehicles/conveyances under Section 17(5) unless a service is notified as obligatory for employers; the matter is disputable and may attract show-cause notices.