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2023 (3) TMI 1257 - AAR - GSTClassification of supply - GST Rate and HSN code - supply of leasing of the pre-owned motor vehicle - monthly lease fees received from customers for leasing pre-owned Cars - applicability of serial no. 17 (viia) of Notification No. 11/2017-Central Tax (Rate) dated 28-06-2017 read with Notification No. 08/2018-Central Tax (Rate) dated 25th January 2018 - Compensation cess applicable to the monthly lease fees received from customers for leasing of pre-owned Cars would be determined in accordance with serial no. 42A of Notification No. 01/2017- Compensation cess (Rate) dated 28th June 2017 or not. HELD THAT:- After perusing all the aspects of the matter al hand i.e. the factual details as well as the legal provision applicable in the present case it can be said that the supply of leasing of the pre-owned motor vehicle is for the furtherance of business. It is apt to mention here that the purchaser/owner of motor vehicles needs to follow the provisions of the Motor Vehicles Act, 1988 along with applicable rules. And in the present matter this supply of leasing of motor vehicles falls under the scope of supply as defined in the section 7 of the CGST Act, 2017. The leasing of the pre-owned vehicle is a taxable event and the rate of tax is to be determined in accordance with serial no. 17 (VI) of notification no. 11/2017-CT(R) dated 28.06.2017 as amended which states that the tax is to be charged at 'same rate of central tax as applicable on supply of like goods involving transfer of title in goods.' And the applicable compensation cess is also to be determined in accordance with notification no. 1/2017-compensation cess (Rate) dated 28.06.2017. Meaning thereby that the tax rate on the leasing of the pre-owned vehicle is to be determined as on like goods. And the availment of the input tax credit by the applicant is subject to the conditions prescribed under section 17(5) of the CGST Act, 2017 read with the relevant rules. In the light of the proper officer's comments on the issue at hand mentioned here, it can be said that the applicant has not submitted a clear picture on the issue of availment of ITC before the authority. The supply of leasing of the pre-owned vehicles is not covered under the notification no. 8/2018 -Central Tax (Rate) dated 25th January 2018 as this is related to the sale of old and used vehicles. This notification needs to be read with rule 35 of the CGST Rules, 2017. It shall not apply in the case of motor vehicles given on lease. In the case of transfer of right to use any goods i.e. leasing, the applicable rate of tax is same as of new vehicles under the GST Act and compensation cess also as on supply of similar goods. The authority is of opinion that the supply of leasing of pre-owned vehicles cannot be treated as leasing or renting of goods like computers, furnitures, refrigerators or air conditioners etc. And the tax rates of new vehicles are to be applicable in the present mailer as per the specification of the vehicles i.e. engine capacity and size of the vehicles and mode of fuel etc. under chapter 87. Thus, the applicable rate of tax on the supply made by the applicant is to determined in accordance with serial no. 17(vi) of Notification No. 11/2017-Central Tax (Rate) dated 28-06-2017 as amended - applicable rate of tax is as Notification No. 01/2017-Compensation cess (Rate) dated 28th June 2017.
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