In a significant case, the Telangana Authority of Advance Ruling (AAR) has held that the transaction of supply of ambulances to the government of Tripura attracts 28 % Integrated Goods and Service Tax (IGST) as it is an inter-state supply.
The applicant M/s. Raminfo Limited have submitted that they have a new business opportunity at hand and they would like to understand the provisions related to; the business in which they are intended to undertake the opportunity.
It was submitted that they have a work order for the supply of Mobile common service centres” from the State government department, which is commonly known as Ambulances for providing health services. To execute the 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 as Mobile common service centres. Modified Vehicles (Mobile Common Service Centers) will be supplied to the end user/customer.
As per Section 17(5)(a) of CGST/TGST Act’2017 the ITC on purchase of such vehicles which are meant for further supply of such motor vehicles is not a blocked credit as the definition of ‘supply’ includes sale, transfer, barter, exchange, renting, disposal or leasing of such vehicles.
The transaction of the supply of ambulances to the government of Tripura is an interstate supply which attracts tax under the IGST head. The rate of tax applicable to the commodity under HSN 8703 is 28% for all transactions after 30.09.2021.
It was evident that the transaction does not fit the description of the vehicle under the tariff heading 8702 as the vehicle, supplied by the applicant to the government of Tripura, is a seven-seater and is meant to transport less than ten or more persons, including the driver, as stated by the applicant.
It was noted that as per Section 17(5)(a) of the CGST Act, 2017, the ITC on the purchase of vehicles that are meant for further supply of motor vehicles is not a blocked credit as the definition of ‘supply’ includes sale, transfer, barter, exchange, renting, disposal, or leasing of the vehicles.
The bench Comprising of Kasi Visweswara Rao and Sahil Inamdar held that they are eligible for taking input tax credit on the tax charged on any supply of goods or services which are used or intended to be used during furtherance of this business provided the applicant fulfils the conditions for availing of ITC as detailed in provisions of Section 16 of CGST/TGST Act’2017.
Further held that the applicant shall utilize the input tax credit in the electronic credit ledger as prescribed under Section 49 of the CGST Act, 2017 read with Rule 88A of the CGST Rules pertaining to the order of utilization of input tax credit.
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