No Input Tax Credit for purchase of Motor Vehicles used for Cash Management Business and supplied post usage as Scrap: AAAR [Read Order]

The Appellate Authority for Advance Ruling (AAAR), Maharashtra ruled that the input tax credit cannot be allowed on the purchase of motor vehicles used for cash management business and supplied post usage as scrap.

The authority was deciding the issue whether the money being transported by the Appellant in the cash carry vans is “goods” or otherwise for the purposes of availing Input Tax Credit under the GST law.

The appellant is having cash management network pan India. As part of the business, the appellants purchased security vans popularly known as “cash carry vans” for transportation of cash. The appellant purchased raw motor vehicles and requisite fabrication, get them converted to cash carry vans. The appellant also pays GST on fabrication. For this purpose, the appellant purchases the motor vehicle and pays GST. The credit of GST is not availed by the appellant presently. While purchasing Cash Carry Vans during the pre-GST era, the appellant has paid the Central Excise Duty as well as Value-added Tax. When these vans cannot be used further, the appellant sells these motor vehicles as scrap. In certain cases, instead of purchasing motor vehicles, the appellant prefers to hire these motor vehicles.

The appellants approached the AAR seeking clarification with regard to the GST liability on supply of such motor vehicles as scrap after its usage and the availability of input Tax Credit on purchase of motor vehicles i.e. cash carry vans which are purchased, used for cash management business and supplied post usage as scrap.

The Advance Ruling Authority held that the supply of motor vehicles i.e. cash carry vans as scrap after its usage will be treated as supply in the course or furtherance of business in terms of the provision of Section 7 of the CGST Act, 2017 and such transaction would attract GST as the disposal of cash given is a transaction in connection with or incidental to or ancillary to business in so much as the sale proceeds of such vans is treated as income.

With regard to the issue of availability of input tax credit, the authority referred the matter to the appellate authority due to the difference of opinion between the members.

Before the appellate authority, the appellants contended that although in general understanding, what is being transported by the appellants is currency or cash or money, from the Appellant’s point of view or for the appellant, what is transported is ‘goods’ and not ‘money’, does not support their cause, as the definitions provided in Acts are universal and same cannot be interpreted for suiting the requirement of any individual as claimed by the Appellant. If ‘Money’ is not covered as ‘Goods’ in the definition of ‘Goods’ under CGST Act, then it is not ‘goods’ for everyone and it cannot be said that it is not ‘goods’ for general perception and it is ‘goods’ for the Appellant.

The Appellate Authority, finally ruled that Input Tax Credit is not available to CMS Info Systems Limited on purchase of motor vehicles i.e. cash carry vans, which are purchased and used for cash management business and supplied post usage as scrap.