TaxTMI 
TaxTMI 
TaxTMI 
2022 (2) TMI 239
X X X X Extracts X X X X
X X X X Extracts X X X X
....visions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the MGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression 'GST Act' would mean CGST Act and MGST Act. 2. FACTS AND CONTENTION - AS PER THE APPLICANT 2.1 "As per Section 17(5) of the CGST Act, 2017, input credit can not be availed on Motor vehicles used for transportation of persons having approved seating capacity of not more than 13 persons (including the driver) including leasing, renting or hiring thereof. 2.2 As far as input credit on Rent a cab service is concerned, applicant is providing service to client indirectly as the service charges collected by it are based on percentage of Salary payable to employees; if an employee reaches late, his/her salary will accordingly be deducted and to that extent applicant's service charge will also be reduced. 2.3 Applicant is paying RCM @12% on Bus service availed by it with Capacity of More than 13 seating, and are eligible to claim input Credit of same. Applicant Submission dated 26.11.2021:- 2.4 The Ap....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ct 2017, the input tax credit used in the course or furtherance of business is allowable to the registered person. Hence, in the instant case, input tax credit shall be allowable to the Applicant. 2.10 Further, as per Section 16 (2) of CGST Act, 2017, the registered person can claim the input tax credit provided tax invoice and service is received, liability payable under reverse charge has been discharged and return under section 39 has been furnished. 2.11 In the instant case, the Applicant has received the bus service, for commutation of its employees, GST liability payable shall be paid by the Applicant and GSTR-3B (return under Section 39) is being filed by the Applicant regularly. Accordingly, the conditions mentioned in section 16(2) of CGST Act 2017 are being fulfilled by the Applicant. 2.12 As per amended provision of Section 17(5)(b)(a) of CGST Act 2017, w.e.f. 01.02.2019, input tax credit on motor vehicles used for transportation of persons having approved seating capacity of not more than thirteen persons is not allowable. In the instant case, the bus service availed by the Applicant is 49-seater i.e. more than 13 seater. Accordingly, the same is not falling under th....
X X X X Extracts X X X X
X X X X Extracts X X X X
....pite of specific directions to file written submissions, no written submissions have been filed. 04. HEARING 4.1 Preliminary e-hearing in the matter was held on 04.02.2021. On the preliminary online e-hearing, Shri. Deepak Patel, CA and also Authorized representative of applicant was present. Jurisdictional Officer was absent. 4.2 The application was admitted and called for final e-hearing on 26.11.2021. The Authorized representative of the applicant, Shri. Ganesh Narayan, learned CA, Shri. Paras Nath, learned CA, Shri. Jainesh Rupani, learned CA and Smt. Veenu Agarwal, learned partner were present. Jurisdictional officer was absent. Applicant was heard. Applicant was directed to produce documents to explain exact nature of transactions being undertaken by them. 05. OBSERVATIONS AND FINDINGS: 5.1 We have understood the facts of the matter, perused the documents on record and considered the submissions, both oral and written, made by the applicant. The jurisdictional officer has neither attended the hearings nor has filed any submissions in the matter. 5.2 The Applicant is a Private Limited Company engaged in the business of providing manpower services. The Applicant had enter....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ITC thereof in the present case. 5.7 The GST Council in its 37th meeting recommended that supply of renting of motor vehicles when provided by suppliers paying 5% GST to corporate entities may be place under Reverse Charge Mechanism (RCM). Thus RCM was not recommended for suppliers paying 12% GST with full Input Tax Credit (ITC). Accordingly, Notification no. 22/2019-Central Tax (Rate) dated 30.09.2019 with effect from 01.10.2019 was issued. 5.7.1 The relevant entry of the said Notification no. 22/2019-Central Tax (Rate) dated 30.09.2019 w.e.f. 01.10.2019, is reproduced hereunder: SI.No. Category of Supply of Services Supplier of Services Recipient of Service 15. Services provided by way of renting of a motor vehicle provided to a body corporate. Any person other than a body paying central tax at the rate of 2.5% on renting of motor vehicles with input tax credit only of input service in the same line of business Any body corporate located in the taxable territory. 5.7.2 Thus, as per the Notification no. 22/2019-Central Tax (Rate) dated 30.09.2019 w.e.f. 01.10.2019, M/s N.B.S. Travel providing the bus service is not required to levy G5T (since it is not a body corporate....
X X X X Extracts X X X X
X X X X Extracts X X X X
....ted 20.09.2019 examined the request to place the supply of renting of motor vehicles under RCM and recommended that the said supply when provided by suppliers paying GST @ 5% to corporate entities may be placed under RCM. RCM was not recommended for suppliers paying GST @12% with full ITC, so that they may have the option to continue to avail ITC. RCM otherwise would have blocked the ITC chain for them. Accordingly, the following entry was inserted in the RCM notification with effect from 1.10.19: 3. Post issuance of the notification, references have been received stating that when a service is covered by RCM, GST would be paid by the service recipient and not by the supplier. Therefore, the wording of the notification that "any person other than a body corporate, paying central tax at the rate of 2.5%" is not free from doubt and needs amendment/ clarification from the perspective of drafting. 4. The matter has been examined. When any service is placed under RCM, the supplier shall not charge any tax from the service recipient as this is the settled procedure in law under RCM. There are only two rates applicable on the service of renting of vehicles, 5% with limited ITC and 12%....
X X X X Extracts X X X X
X X X X Extracts X X X X
....onditions and restrictions and in the manner specified in Section 49 of the CGST Act. 5.9.3 We have no doubt that in the subject case, the supply of services received by the applicant is used in the course or furtherance of their business and therefore prima facie, they are eligible to take credit of GST charged by their suppliers. 5.10 While we find that the applicant is eligible to take ITC under the provisions of the CGST Act, it is to be seen whether Section 17 (5) of the said Act debars the applicant from taking credit. We find that, Section 17 (5) has been amended by CGST (Amendment) Act, 2018 (No. 31 of 2018) dated 29.08.2018 made effective from 01.02.2019 vide Notification No. 02/2019-C.T.-2019 dated 29.01.2019. Prior to this date Section 17 of CGST Act, 2017 read as under:- Section 17 (5) Notwithstanding anything contained in sub-section (1) of section 16 and sub-section (1) of section 18, input tax credit shall not be available in respect of the following, namely:- (a) motor vehicles and other conveyances except when they are used- (i) for making the following taxable supplies, namely:- (A) further supply of such vehicles or conveyances ; or (B) transportation....