TMI Blog2022 (2) TMI 239X X X X Extracts X X X X X X X X Extracts X X X X ..... service from M/s N.B.S. Travels. Thus, as per the Notification no. 29/2019-Central Tax (Rate) dated 31.12.2019, M/s N.B.S. Travel providing the bus service is not required to levy GST (since it is not a body corporate). It does not issue an invoice charging central tax at the rate of 6 per cent. to the service recipient i.e. the applicant. The Applicant, being the service recipient is liable to discharge GST under Reverse Charge Mechanism. Whether applicant is entitled to avail Input tax credit (ITC) of GST charged on such inward supply? - Chapter V of the CGST Act, 2017 - HELD THAT:- Section 16 of the CGST Act, 2017, contains provisions with respect to eligibility and conditions for taking ITC. As per Section 16 (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 tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business. Hence, ITC in respect of receipt of services is available and can be taken, subject to such conditions and restrictions and in the manner spec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... milar 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 Applicant is a Private Limited Company and is engage ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aid service is being used in the course of providing outward supply of manpower supply. As per the provisions of Section 16(1) of CGST Act 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rate of GST applicable shall be 2.5% CGST and 2.5% of SGST or 5% of IGST 03. CONTENTION - AS PER THE CONCERNED OFFICER: The jurisdictional officer was absent and in spite 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the subject case the GST has been paid by the receiver of services while in the above referred cases the GST was paid by the provider of services. Therefore it is necessary to look into the provisions related to RCM and 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 rentin ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... he subject of Reverse Charge Mechanism on Renting of Motor Vehicles clarifies the above discussions. The same has been reproduced as under:- Reverse Charge Mechanism (RCM) on renting of motor vehicles -reg. Suppliers of service by way of renting of any motor vehicle designed to carry passengers where the cost of fuel is included in the consideration charged from the service recipient have an option to pay GST either at 5% with limited ITC (of input services in the same line of business) or 12% with full ITC. 2. The GST Council in its 37th meeting dated 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 wo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 16 of the CGST Act, 2017, contains provisions with respect to eligibility and conditions for taking ITC. As per Section 16 (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 tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business. Hence, ITC in respect of receipt of services is available and can be taken, However, the credit is available subject to such conditions 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. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... an thirteen persons (including the driver) 5.11 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 the block credit as provided under section 17 (5) of CGST Act 2017 and, therefore, in the instant case, (since the applicant is utilizing the services of renting of motor vehicle for business or furtherance of business), the input tax credit is not restricted to the applicant under the referred Section 17(5) of CGST Act 2017. Thus the applicant would be eligible for ITC but only with effect from 01/02/2019 only, as per above legal provisions. 06. In view of the extensive deliberations as held hereinabove, we pass an order as follows: ORDER (Under Section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) For reasons as discussed in the body of the order, the questions are answered thus - Question: - Whether the Applicant (Maanicare System India Private Limited) is eligible to take input tax credit on GST paid under Reverse Charge Mechanism @ 5% for hiring of buses for transportation of employees? Answer:- An In t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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