• Whether the GST paid on the cars provided to different customers on lease rent will be available to it as INPUT TAX CREDIT (ITC) in terms of S.17(5) of CGST Act, 2017?

PJ/Case Law/2019-2020/3541

*BEFORE THE AUTHORITY FOR ADVANCE RULING (MADHYA PRADESH): In Re: Narsingh Transport: MANU/AR/0046/2019*

*FACTS*

• The applicant provides ‘Goods Transport Agency Service’ and avails option to pay tax @ 12% and availing ITC facility on vehicles and their spares used for providing GTA services as well as on inward services namely insurance of vehicles and repair and maintenance of vehicles.

• The applicant purchased cars & provide to various companies on lease rent under a Lease Agreement entered between them on monthly basis for their use in furtherance of their business.

*ISSUE INVOLVED*

• Whether the GST paid on the cars provided to different customers on lease rent will be available to it as INPUT TAX CREDIT (ITC) in terms of S.17(5) of CGST Act, 2017?

*OBSERVATION/RULING*

• In the present case the Applicant provides cars on Lease Rent to his customers for carrying passengers and hence not covered by the exception as provided in clause (B) and (C) of sub-section 5(a) after the amendment Act of 2018 and in clause (B) and (C) of sub-section 5(a)(i) before the amendment as well as in Sub-section 5(a)(ii) of Section 17 before the amendment. The sub-section 5(a)(i) reads as "for making following taxable supplies namely" and subsection 5(a)(A) after the amendment/5(a)(i)(A) before the amendment, reads as "further supply of such vehicles or conveyances".

• The court further observed that the term ‘further supply’ has not been defined in the Act, therefore one has to go by definition of "supply" which is the very plinth of GST law. The term 'further' prefixed to 'supply' is merely in the form of adverb and does not differentiate it from 'Supply' by any stretch of imagination.

• In the light of the facts and circumstances the Court observed that the activities carried out by the Applicant regarding supply of tax paid motor vehicles on monthly lease rent plus Goods & Service Tax as applicable to their customer under a proper agreement properly satisfies the conditions laid down under Section 17(5)(a)(i)(A) before the amendment and under subsection 5(a)(A) after the amendment to make it eligible for availment of input tax credit on motor vehicle for the Tax paid by it while acquiring the said vehicles.

• Thus, it was observed that the Applicant is entitled to avail ITC on cars (passenger vehicles) which are further supplied to customers on lease rent, subject to condition applicable in such supply of services as per notification number 11/2017- Central Tax(Rate) Dated 28.06.17 as amended from time to time and corresponding notifications issued under MPGST Act.

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PJ/Case Law/2019-2020/3541

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