The West Bengal Authority for Advance Ruling (AAR) ruled that Input Tax Credits can be claimed in accordance with the law on the goods transport vehicle so leased out.
The Applicant intends to lease trucks or tankers without an operator to goods transport agencies or any other persons. The Applicant seeks a ruling whether the supply of services by way of leasing of goods transport vehicle without operators to GTA would be exempted and also wants to know, if not exempted what will be the appropriate classification and rate of tax in GST Act, 2017. Further, the applicant seeks clarification on whether the credit of input tax paid on the purchasing of motor vehicles is admissible or not.
The ruling was delivered by the Authority comprising of Susmita Bhattacharya, Joint Commissioner, and Mr. Parthasarathi Dey, Senior Joint Commissioner on an application filed by lshan Resins & Paints Limited.
While relying on Judgment in Commissioner of Customs & Central Excise vs Sachin Malhotra held that in renting of a cab scheme, as defined under section 75 of the Motor Vehicles Act, 1988, the possession and control of the vehicle is transferred to the hirer. Therefore, unless such transfer of the right to use happens a contract of hiring a vehicle does not qualify as renting a cab under the rent-a-cab scheme.
The Authority observed that the applicant intends to lease out vehicles like trucks, tankers, etc. that are designed to transport goods. The control and possession of the vehicle will be transferred to the lessee, who will engage the operator and bear the cost of repair, insurance, etc. lt is, therefore, not classifiable under SAC 9966, which is restricted to rental services of transport vehicles with an operator.
While allowing the application, the AAR further clarified that the applicant’s service of leasing goods transport vehicles is classifiable under SAC 997311 and taxable under Sl No. 17(iii) of Notification No. 1112017 – CT (Rate) dated 2810612017.
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