Whether input tax credit is admissible on ambulances purchased for employees as per statutory requirement?

PJ/Case Law/2018-2019/3520

CASE LAW

Case :  M/s. Nipha Exports Pvt. Ltd
Citation: 43/WBAAR/2018-19 dated 26/02/2019
Issue: Whether input tax credit is admissible on ambulances purchased for employees as per statutory requirement?
Brief Facts: The applicant is engaged in manufacture of agricultural machinery. Applicant has purchased an ambulance as required under Section 45(4) of the Factories Act, 1948 for the benefit of employees.
Appellant’s contention:  In the present case, the Applicant purchased the ambulance and submitted Invoice dated 22/11/2018, which is prior to the period of amendment under section 17(5).The Applicant contended that the the input tax credit on ambulance is allowed under the Second Proviso to Section 17(5)(b) of the GST Act.
Respondent’s Contention and Judgement:   The amended provision of the GST Act has come into effect from 01/02/2019. Section 17(5) of the GST Act, as it stood prior to the amendment, is relevant for claiming input tax credit as per the said section. Inward supply of ambulance, being a motor vehicle, is not admissible under Section 17(5)(a) of the GST Act.
The exception carved out under Section 17(5)(b)(iii)(A) of the GST Act for services which are obligatory for an employer to provide to its employees under any law for the time being in force is limited only to rent-a-cab, life insurance and health insurance.Further under section 16(1) is subject to the provisions of law at the time of occurrence of the taxable event, irrespective of when the claim is made and the Second proviso to section 17(5)(b) of the GST Act, as it stands post amendment effective from 01/02/2019, is not applicable in present case as transaction was made in November 2018.
Decision: Ruling is against the assessee.
Comment:The gist of the case is that company has purchased ambulances and Input tax credit is not admissible under Section 17(5) of the GST Act. Further the amendment in section 17(5) has came into effect from 01/02/2019vide Notification No. 2/2019-CT dated 29/01/2019.Therefore, applicant cannot claim input tax credit on the ambulance purchased in November 2018, even if provisioning of ambulance service to the employees is obligatory under the Factories Act, 1948.
We know that after the amendment, the credit is allowed on motor vehicle having capacity more than 13 persons. This implies that the credit on ambulances having capacity more than 13 persons will be allowed now. But it will not be allowed if sitting capacity is less than 13 persons. The condition of statutory requirement is linked with rent-a-cab, health and medical insurance but this condition is not linked with purchase of motor vehicle. Hence, the credit will not be allowed on ambulance even if there is statutory requirement. We have seen that the credit was allowed on such expenses in service tax era if there was statutory requirement. But there is specific clause for the same in the GST Act.
Prepared by: Meenal soni

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PJ/Case Law/2018-2019/3520

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