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TMI Blog2022 (8) TMI 1236X X X X Extracts X X X X X X X X Extracts X X X X ..... cle having approved seating capacity of more than 13 persons for transportation of employees to and from the workplace? 3.2. If input tax credit is available, whether it would be restricted to the extent of cost borne by the applicant? 4. Contentions of the applicant: 4.1. The applicant submits that their factory operates 24 hours a day, on four shifts. Furthermore, the factory and mines are located in remote area where public conveyances are not available at all time. Since some of the factory shifts are in odd hours and since the factory is not easily accessible, the applicant has to provide transportation facilities to its employees in non-air-conditioned bus having approved seating capacity of more than 13 passengers for commuting to and from workplace. The service providers collect 5% GST on the vehicle hiring charges. In order to ensure that the transportation facility is used by only authorized persons/employees, the applicant issues pass to employees and a nominal recovery is made from them every month. The difference between the hire/rental charges paid to service providers and the nominal recovery made from the employees is part of the cost to the applicant. 4.2. Sect ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l agreement of employment, which are treated as salary/cost to company (CTC), is outside the ambit of GST. 4.5. The transportation service does not constitute a supply in the hands of the applicant as it is merely a non-monetary consideration for services rendered by the employee. Regarding the extent of ITC admissible to the applicant, the Hon'ble Bombay High Court in CCE Nagpur Vs. Ultratech Cements Ltd; 2010 (260) ELT 369 Bom, has held that credit is not admissible to the manufacturer on part of the cost borne by the worker and proportionate credit embedded in cost recovered from employees, needs to be reversed. In light of the above-cited judgment, ITC will be restricted to the extent of the cost borne by the applicant. 4.6. The applicant further submits that the facts of the case are identical to In Re: M/s. Tata Motors Ltd- Authority for Advance Ruling, Maharashtra 2020 (9) TMI 352, wherein the Maharashtra AAR has held that ITC is available in respect of GST charged by service provider on hiring of bus/motor vehicle having a seating capacity of more than thirteen persons for transportation of employees to and from the workplace. The AAR further held that ITC is restrict ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... all be credited to the electronic credit ledger of such person. Section 17 of the CGST Act pertains to the apportionment of credit and blocked credits. Sub-section (1) of Section 17 provides that where the goods or services or both are utilized by the registered person partially for the purpose of any business and partially for other purposes, the amount of credit shall be restricted to so much of the input tax as is attributable to the purposes of his business. Likewise, subsection (2) of Section 17 provides that where the goods or services or both are used by the registered person partly for effecting taxable supplies including zero-rated supplies and partially for exempt supplies, the amount of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies including zero-rated supplies. Sub-section (3) provides for prescribing how the apportionment shall be made in cases covered by subsection (2). Sub-section (4) of Section 17 provides for special provision for availment of ITC by banking companies. Subsection (5) of Section 17 provides the negative list of goods and services in respect of which input tax credit is not available. 7.4. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 of passengers; or (C) imparting training on navigating such vessels; or (D) imparting training on flying such aircraft; (ii) for transportation of goods; (ab) services of general insurance, servicing, repair and maintenance in so far as they relate to motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa): Provided that the input tax credit in respect of such services shall be available,- (i) where the motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa) are used for the purposes specified therein; (ii) where received by a taxable person engaged,- (I) in the manufacture of such motor vehicles, vessels or aircraft; or (II) in the supply of general insurance services in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of bus/motor vehicle having approved seating capacity of more than 13 persons for transportation of their employees to and from the workplace. 7.8. The second question raised by the applicant is regarding the extent to which the input tax credit can be availed by them as they are recovering a part of the cost incurred for transportation from the employees. The applicant cannot avail of the input tax credit of tax paid corresponding / attributable to the cost of transportation recovered from the employees. Therefore, the eligibility of the applicant to avail input tax credit will be restricted to the extent of the cost of transportation borne by the applicant. Given the observations stated above, the following rulings are issued; RULING 1. Whether input tax credit is admissible on GST charged by service provider on hiring of bus/motor vehicle having approved seating capacity of more than 13 persons for transportation of employees to and from the workplace? Ruling: The applicant is eligible to avail the input tax credit of GST charged by the service provider subject to fulfilment of conditions prescribed in Section 16 of the CGST Act, 2017. 2. If input tax credit is available, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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