Upon satisfying the requirements outlined in Sections 16 and 17 of the Central Goods and Services Tax (CGST) Act 2017, the Authority for Advance Ruling ( AAR ) of Chhattisgarh determined that the applicant is qualified for an Input Tax Credit ( ITC ) on the rent bill provided by the service provider who rents them buses charging Goods and Services Tax ( GST ) at 18%.
M/s Abhay Singh Gill, the applicant engaged in the service of transportation of passengers by air conditioner Buses (i.e. Bus operator).
The bench observed that the applicant charged consideration from passengers which is inclusive of fuel cost and accordingly paying GST at 5%. They have taken such buses on rent from another service provider. The service provider issued them bills of rent for such buses along with GST and is separately mentioned in his rent bill.
The applicant contended that the Sr. No. 8(vi) of Notification No. 11/2017-CT (Rate) does not restrict “credit of input tax charged on services by another service provider for transporting passengers in a motor vehicle or renting of a motor vehicle”.
The bench noted the contention of the applicant that it has taken buses on rent and as per the above said notification, the credit of input tax charged on renting of a motor vehicle is not denied accordingly they can take input tax credit of GST at 18% which is mentioned on the Rent bill by the service provider who has given him such Buses on rent.
The authority observed that the applicant is under the misplaced notion that eligibility of Input Tax Credit is governed under the provisions of Notification No.11/2017-CT(Rate) as amended, whereas it is not so, in as much as non- availment of ITC is a pre-condition for availing the benefit of applicable tax rate for the services rendered by the applicant as provided under the said Notification.
It was highlighted that on the contrary eligibility to ITC is governed by the provisions as contained under Chapter V relating to ITC vide section 16 and section 17 of the CCST Act, 2017 and this eligibility to ITC has nothing to do with Notification No. II/2017-CT(Rate).
The members, Sonal K. Mishra and Rajesh Kumar Singh, viewed that the applicant is eligible to ITC as under Section 16 read with Section 17 of the CGST Act and not considered the Notification.
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