GST ITC applicable on Purchase of Vehicles to Modify for Purpose of Ambulance services and supply: AAR

The Telangana Authority for Advance Ruling (AAR) has held that the Input Tax Credit (ITC) is applicable on purchase of vehicles to modify for the purpose of ambulance services and supply.

The applicant M/s. Raminfo Limited had a work order for supply of Mobile common service centers from the State government department, which are commonly known as Ambulances for providing health services.

In order to execute the above said business they intend to purchase Maruti Suzuki EECO Vehicles (7 Seater) and they are required to do necessary modifications to the vehicle to enable the vehicle to use it as Mobile common service centers. The modified Vehicles (Mobile Common Service Centers) will be supplied to the end user/customer.

The applicant had sought an advance ruling to determine the admissibility of input tax credit on the purchase of vehicles and other components, as well as the rate of Goods and Services Tax(GST) for the supply of goods or services or both, and how to determine the liability to pay tax on goods or services or both.

 The authorized representatives had stated that they had received a work order from the Government of Tripura for the supply of Ambulances(Mobile Common Service Centers). To fulfill this order, they are procuring Maruti Suzuki Eeco vehicles (7-seater) and making modifications to them at their workshop in Hyderabad, Telangana State. Consequently, they are engaged in making Integrated Goods and Services Tax (IGST) supplies to the State of Tripura.

The applicant wanted the clarification on two matters: the rate of tax applicable to the goods they are supplying, and the eligibility of ITC for the goods and services procured in the State of Telangana or from other states.

The authority of S.V. Kasi Visweswara Rao, Additional Commissioner (State Tax), and Sahil Inamdar, Additional Commissioner (Central Tax), had observed that ITC for vehicle purchases, intended for modification into ambulances at a workshop in Hyderabad, Telangana State, and subsequent supply to the Government of Tripura, is permissible if the applicant fulfills the conditions outlined in Section 16 of the Central Goods and Services Tax /ITGST Act 2017.

According to Section 17(5)(a) of the CGST/TGST Act 2017, the input tax credit (ITC) can be claimed on the purchase of vehicles that are intended to be further supplied as motor vehicles. This provision considers the ITC as not blocked credit since the definition of 'supply' includes various transactions such as sale, transfer, barter, exchange, renting, disposal, or leasing of such vehicles.

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