TaxTMI 
TaxTMI 
2019 (4) TMI 1824
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....ices Tax Act, 2017 are paid to the supplier, which falls within the meaning and definition of input tax defined under section 2(62) of the Act. 3. M/s YKK has its unit at Plot No. 699, Sector-2, Plot No. 122, Sector-6, HSIIDC, Growth Centre Bawal, District Rewari, Haryana, here the employees of the appellant are engaged in manufacturing the Final Products. Further, apart from the employees manufacturing final products, various managerial service employees also carry out their day to day affairs from the said factories. The said factories of the M/s YKK are situated at remote location in Haryana where public transport is very minimal which hinders transportation of employees to reach the factories. 4. In order to carry out its business of supply of its final product and for efficient functioning of its business as a whole, M/s YKK has engaged various contractual service providers who provide transportation services and ensure that employees of YKK are able to reach the factories in time for doing their day to day work as scheduled. It is for this purpose that M/s YKK enters into contracts with the said suppliers for hiring buses as well as cars. M/s YKK submitted a copy of the....
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....put tax credit on: (a) GST charged by the Contractor for hiring of buses for transportation of employees? (b) GST charged by the Contractor for hiring of cars for transportation of employees? Comments of the concerned officer U/S 98(1) OF THE CGST/HGST ACT, 2012 7. The Deputy Excise & Taxation Commissioner (ST), Rewari, vide letter Ref.No. SPL-1/ETO (W-4), Dt. 18.06.2018, submitted the requisite comments on both the above questions raised by the applicant, as under: The dealer is entitled to take credit of GST charged by the contractor on hiring of buses and cars to the Applicant which are used for transportation of its employees to the factories. It is submitted that the dealer is registered person engaged in the business of supply of final products which are taxable under the Act. Further, for the purpose of supply of the said final products, the dealer has employed various employees who work in various shifts at the said factories and it is for transportation of the said employees that the Applicant has contracted with the contractors for supply of buses. Thus the dealer is eligible to take credit of GST paid to the said contractors firm whom the buses....
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....rmining the fate of the application filed by the Appellant. However, in the present case, despite specifically requesting a copy of comments furnished by the Deputy Excise and Taxation Commissioner, Rewari, the same was not granted to the Appellant and the impugned ruling was passed without even referring to the said comments with a premeditated mind. Reliance has been placed on Hon'ble Bombay High Court in the case of Orkay Silk Mills Limited & Others vs M.S. Bindra & Others, 1988 (33) ELT 48 = 1986 (2) TMI 71 - HIGH COURT OF JUDICATURE AT BOMBAY wherein it was held that: "It is necessary to reiterate that the quasi-judicial authorities exercising powers under the Act should remember that not only justice should be done but the parties who are affected by the adverse order should have a feeling that justice has been done to them. It is not enough for any authority to assert that justice is done without there being a show of justice. The rules of natural justice are not empty formalities but must be observed to remove any feeling in the mind of the party adversely affected that his cause was not considered. The manner in which the respondent No. 1 has proceeded to pass the....
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....ed that the Appellant has fulfilled all eligibility conditions for taking input tax credit specified in Section 16 of the Act. Reliance has been placed upon the decision of the Punjab and Haryana High Court in the case of Commissioner of Central Excise vs. Maruti Suzuki India Pvt Ltd 2017 (49) STR 261 (P&H) = 2016 (11) TMI 237 - PUNJAB AND HARYANA HIGH COURT wherein it was held that: "24. Similarly, the Rent-a-Cab services used by the executives of the respondent for the purpose of travelling required for business meetings, visits to the dealerships, visits to the vendor sites, dealers meet business promotion activities, vehicles launch, conferences, etc. is a an expenditure in relation to business being incurred by the respondent in order to promote the sales and for efficient running of the business for which they are entitled to avail Cenvat credit." Thus, the Ld. Advance Ruling Authority having failed to appreciate that the Appellant is entitled to take credit of GST charged by the Contractor on hiring of buses and cars to the Appellant which are used for transportation of its employees to the Factories under Section 16 of the CGST Act and the same is liable t....
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.... the Hon'ble Tribunal in R.S. Travels vs. CCE, Meerut, 2008 (12) STR 27 = 2008 (7) TMI 27 - CESTAT NEW DELHI and Bharat Travels Co. Ltd. vs. CST, Ahmedabad, 2010 (20) STR 646 = 2010 (7) TMI 830 - CESTAT AHMEDABAD wherein, on similar basis as adopted in the judgment of the Uttarakhand High Court in Sachin Malhotra (supra.), the difference between hire and rent as stated above has been applied to hold that the activity of renting is distinct than the activity of hiring of vehicles. In case of rent, as is provided in MV Act, the renter is enabled to take vehicle in his possession and control, whereas in case of hire, the possession and control is held by the contractor. Thus, where the Ld. Advance Ruling Authority failed to appreciate the said distinction, the ruling is liable to be set aside. (j) In the present case, a bare perusal of the sample contracts disclose that the possession as well as control of the buses and cars remain with Contractor, who engages driver and conductor to supply transportation service to the Appellant. It is thus, clear that the Appellant merely uses the buses and cars for giving conveyance to its employees to the Factories without retaining any c....
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....be used for carrying the passengers under a contract and fees for such usage is payable on time basis or point to point basis, then the permit which has to be obtained is called contract carriage permit. Further, MV Act provides for a separate license in case contractor wish to engage in rent a cab business. Accordingly, it is clear that running motor vehicles as a whole on hire basis require contract carriage permit and running specifically cabs as whole on rent basis require cab rent permit. It is thus clear that MV Act contemplates different kind of licenses for renting and hiring and therefore it re-enforces the fact that renting and hiring are separate activities under its scheme. Hence, the Ld. Advance Ruling Authority ought to have considered that MV Act contemplates renting and hiring of motor car as separate activities and cannot be regarded as same in absence of any deeming fiction to that effect under Finance Act. Thus, the Impugned ruling is liable to be quashed inasmuch as it considers hiring and renting as synonyms. (l) The Ld. Advance Ruling Authority ought to have considered that Section 74 deals with hiring of the motor vehicles whereas Section 75 deals wi....
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.... vehicle that can carry more than 6 people is categorised as omnibus. In the present case, applying the aforesaid definition, it is clear that the buses hired by the Appellant which carry more than 12 passengers cannot be covered within the meaning of 'cabs' On a reading of the definitions in the MV Act, it is clear that the meaning of cab is understood to include only those motor vehicles which carry upto 12 passengers. Thus, the restriction under Section 17 (5) which is only applicable to 'cabs' could not have been extended to include a bus with seating capacity above 12 passengers. Thus, the Impugned ruling is liable to be quashed. (n) Perusal of Section 74 and Section 75 of the MV Act makes it clear that bus is given a license only under Section 74 whereas motor-cab can be given license under Section 75 and/or Section 74 depending on the usage. Accordingly, it is clear that bus is not given a license under Section 75 and therefore, it is submitted that bus perhaps cannot operate on rent basis. It is thus submitted that when neither Section 75 nor Rent a Cab Scheme provide for renting of the bus, Section 17(5) cannot be read to include bus for disallowance of input tax ....
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....ve and admitted the said appeal. (r) The Ld. Advance Ruling Authority ought to have considered that Section 17 (5) is a non obstante clause to the enabling provisions of granting input tax credit specified in Section 16 (1) of the Act. The entire rationale for granting input tax credit is to avoid cascading effect of taxes on supply of goods or services or both. Thus, reading of non obstante clause in Section 17 discloses that an exception has been made to beneficial provisions of granting of input tax credit by specifying situations where such credit shall not be available to the registered person. In this regard, it is a settled principle of law that provisions which carve out an exception to a beneficial provision ought to be read strictly and unless a particular activity or goods or services specifically fall within exception, the benefit of provisions should not be denied. In this regard, it is a settled principle of law laid down in Mangalore Chemicals and Fertilizers Ltd. vs. Deputy Commissioner, 1991 (55) E.L.T. 437 (S.C.) = 1991 (8) TMI 83 - SUPREME COURT, Union of India vs. Wood Papers Ltd. & Anr., 1990 (47) ELT 500 = 1990 (4) TMI 55 - SUPREME COURT and Union of ....
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....against Advance Ruling has to be filed within thirty (30) days from the date of communication thereof to the applicant. As seen from record, the signed copy of the impugned order dated 11.07.2018 was dispatched on 31.08.2018; and received by the appellant on 09.08.2018 as mentioned in the appeal. Appellant filed the present appeal on 05.10.2018. Accordingly, the appeal is found to be filed within prescribed time. Record of Personal Hearing. 11. The personal hearing was fixed for 12.12.2018. Due to administrative exigencies case could not be taken up and the same was adjourned for 31.12.2018. Appellant vide its email dated 27.12.2018 sought adjournment for one week. Next date of hearing was fixed for 08.01.2019 but the appellant sought the adjournment and accordingly the case was adjourned to 23.01.2019. The appellant vide email dated 23.1.2019 made a request for adjournment for one week. Finally, personal hearing was held on 03.04.2019. Advocates Shri Kishore Kunal and ETO, Rewari Shri Adityendra Singh Takshak, attended the hearing on the fixed date and time. 11.1 During the hearing the appellant while reiterating the submissions made in their appeal papers put forth that ....
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....of passengers. 11.5 He also contended that the intention of the legislature appears to be to deny credit only in respect of motor vehicles when used for personal purposes which is also clear from the memorandum explaining the recent amendments to Section 17 (5). In the present case, the Appellant requires the buses and cars for plying the employees to the factories from where output supplies are being made. Thus, denying the credit would be contrary to the intention of the legislature. Discussion and Findings: 12. We have considered the material on record including the appellants grounds, submissions, statutory provisions etc. In terms of Section 101(1) of the Act, this Appellate Authority is mandated to pass such order as it thinks fit, confirming or modifying the ruling appealed against. 13. We now proceed to record our discussions and findings. 13.1 The appellant has contended that hiring of vehicle is different from renting and hence the restriction on Rent-a-Cab service specified in section 17 (5) (b)(iii) to input tax credit on GST charged is not applicable and they are eligible for input tax credit. Further the appellant contended that Appellant has fulfilled ....
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....or-cab for his own use. Whereas in case of 'hire a car', the contractor retains the control and possession of the motor-cab, and is responsible to provide transportation services for consideration which is dependent on the usage i.e. number of kilometres travelled and/or the number of hours the motor-cab is used. In this regard appellant relied upon the judgment of Uttarakhand High Court in the case of Commissioner of Customs & Central Excise vs Sachin Malhotra reported as 2015 (37) S.T.R.684 (Uttarakhand) = 2014 (10) TMI 816 - UTTARAKHAND HIGH COURT. 15.1 We find that service tax was first introduced in the budget of 1994 w.e.f. 1-7-1994. Initially, only few services were proposed to be taxed and later the net was widened. The services provided by any person under a rent-a-cab scheme operator was also included in the definition of taxable services but was exempted up to 31-3-2000. The exemption was later withdrawn and such service was covered within the charging Section 66 of the Finance Act. The relevant provisions of the Finance Act are reproduced herein below :- "Definitions. 65. In this Chapter, unless the context otherwise requires. - ............
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....ng service of renting a motor cab would be amenable to service tax under the Act." 15.3 From the above, it is seen that the taxing statute, do not make any distinction between renting or hiring. Further, irrespective of possession and control of the vehicle, the service so rendered falls within the taxable service. Thus the contention of appellant that hiring of vehicle is different from renting is untenable. 16. Now we take up the third issue whether input tax credit on GST charged by the contractors for hiring of buses and cars for transportation of employees is admissible when there is a restriction on admissibility of input tax credit on Rent-a-Cab service as provided in section 17 (5) (b)(iii) of CGST Act, 2017 and HSGST Act, 2017 which is the main issue/ question. 16.1 To determine the aforesaid main question / issue, it would be appropriate to refer to the statutory provisions applicable in the given context. Section 16. Eligibility and conditions for taking input credit: (1) Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input ....
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....t of capital goods and plant and machinery under the provisions of the Income-tax Act, 1961, the input tax credit on the said tax component shall not be allowed. (4) A registered person shall not be entitled to take input tax credit in respect of any invoice or debit note for supply of goods or services or both after the due date of furnishing of the return under section 39 for the month of September following the end of financial year to which such invoice or invoice relating to such debit note pertains or furnishing of the relevant annual return, whichever is earlier. 16.2 A plain reading of the aforesaid provisions of Section 16 provides that in order to be entitled to take input tax credit, the following conditions are required to be fulfilled: (i) The person availing the credit should be a registered person; (ii) The person availing input tax credit is in possession of a tax invoice or debit note issued by a supplier registered under this Act; (iii) The credit should be of input tax charged on any supply of goods or services or both to the registered person; (iv) The person availing input tax credit should have received the goods....
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....r as part of a taxable composite or mixed supply; and (iv) travel benefits extended to employees on vacation such as leave or home travel concession; 16.5 We have also noted that certain amendment in the Central Goods and Services Tax Act, 2017 have been made vide The Central Goods and Services Tax (Amendment) Act, 2018 (No.31 of 2018) published in the Gazette of India on 30.08.2018. The amended Section 17 (5) of Central Goods and Services Act is reproduced below: "(b) in sub-section (5), for clauses (a) and (b), the following clauses shall be substituted, namely:- "(a) motor vehicles for transportation of persons having approved seating capacity of not more than thirteen persons (including the driver), except when they are used for making the following taxable supplies, namely:- (A) further supply of such motor vehicles; or (B) transportation of passengers; or (C) imparting training on driving such motor vehicles; (aa) vessels and aircraft except when they are used- (i) for making the following taxable supplies, namely:- (A) further supply of such vessels or aircraft; or (B) transportation....