Input tax credit on JCB

[Prateek Agrawal]

An agreement with JCB owner that we will pay monthly rent of ₹ 50000/- to him if any repair and maintenance of JCB will bear by us . If any repair and maintenance done by us and invoices are prepared in our company name can we take INPUT TAX CREDIT of the same in our books of A/c

[YAGAY and SUN]

In our view ITC would be available to you.

[Ganeshan Kalyani]

I am also of the view that input tax credit is eligible.

[Alkesh Jani]

Sir,

I agree with the views expressed by our experts

Thanks

[Himansu Sekhar]

I have a different view.

a, The supply of the R/M services will be to the machine owner. The services will persist there.

b. If such argument is accepted , then if the wheels are changed and the bill is in the name of the service recepient, then ITC is available to the recepient

c. Now in my view, the GST value on the hiring services will also include the R/M value as without such R/M, the hiring service is incomplete. For ease of business the R/M services are provided by the recepient else it should have been borne by the service provider.

[KASTURI SETHI]

The reply posted by Sh.Himansu Sekhar ji, appeals to me. Owner of machine is to bear the repair and maintenance expenses irrespective of the agreement.

[Alkesh Jani]

Sir,

My view is based on the Notification No.11/2017-CT (Rate) dated 28/06/2017 as amended from time to time. The Sl.No.17 which refers to HSN code 9973 i.e. lease or rental service, wherein, it is stated that temporary or permanent or permitting the use …… Therefore, without its repair one cannot use and even temporary use, the repairing charges are normally borne by the user. It can be conclude that the user is temporary owner of the machinery. Hence, ITC is available.

Further, If, by way of agreement, such charges are reimbursed by the actual owner, then I would say, ITC is not available.

Our experts may correct me if mistaken.

Thanks

[Himansu Sekhar]

The major controversy in supply of tangible goods service is the ownership. The ownership is never parted away. It will not be a service even if it is a temporary transfer.

[Alkesh Jani]

Sir,

With due regards, I wish to submit that, in GST regime the concept of effective control is not applicable, In HSN code it is mentioned with or without operator. Based on above, I still stand to my views expressed earlier.

However, different views can be expressed to raise the discussion to the new horizon.

Thanks

[Ganeshan Kalyani]

In practise the user of the asset maintains it. The owner is interested in rent. Of course there would be condition to keep that machine in good condition. In my view the repair is in course or furtherance of the business hence credit is eligible.

[YAGAY and SUN]

Please check the Explanatory Notes to the Scheme of Classification of Services under GST Regime.

[DR.MARIAPPAN GOVINDARAJAN]

In my opinion the views of Shri Alkesh is correct.

[AKSHAY NAIK]

Dear Sirs,

Is Input Tax Credit available on Hiring services of Crane for moving of inventory in stores/warehouse?

Thanks,

[KASTURI SETHI]

Yes. It is available. Hiring of crane is classified under the category of "Right to use /supply of tangible goods". It conforms to the definition of "in business or furtherance of business."

[Himansu Sekhar]

The view of kasturi sir is correct. The use of crane for transfer of goods from one warehouse to another is in relation to the furtherance of business.

AI Summary

Input tax credit eligibility on repair and maintenance of hired machinery depends on who bears and is invoiced for the expense.
Input tax credit availability turns on whether repair and maintenance services for hired machinery are invoiced to and borne by the user; if the user pays and holds invoices in its name, prevailing expert opinion favours ITC, whereas if the owner bears or reimburses those charges or remains the effective recipient, ITC by the user is questionable.