The Telangana State Authority for Advance Ruling (AAR) has held that the GST Exemption cannot be extended to Vehicle Insurance Policy by the Government Authority for the vehicles used for transportation of the employees/Board Members.
The applicant, M/s. Hyderabad Metropolitan Water Supply and Sewerage Board approached the AAR bench seeking a clarification on the question, “Does Vehicle insurance Policy taken to provide Insurance to the vehicles owned by the Board, eligible for exemption as mentioned in Entry No. 3 of the Notification Number 12/2017 – Central Tax (Rate), dt 28th June, 2017.”
The applicant contended that the vehicle insurance policies procured by them for the vehicles owned by the board qualify for exemption.
The bench comprising Sri B. Raghu Kiran, IRS, Additional Commissioner (Central Tax) and Sri S.V. Kasi Visweswara Rao, Additional Commissioner (State Tax) observed that the exemption is allowable if they are directly used to provide services under Schedule XII of the Constitution.
“However if they are used for transportation of employees/board members/other persons they will not have direct relationship to functions discharged under Article 243W and therefore will not qualify for exemption under Notification No. 12/2017,” the bench said.
“GST exemption is available only if the vehicles are directly used for to provide services under Schedule XII of the Constitution. If they are used for transportation of employees/board member/other persons with no direct relationship to functions discharged under Article 243W, the exemption cannot be availed.”
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