ITC Admissible on purchase of vehicles, Modified and Supplied as Ambulances: AAR [Read Order]

The Telangana Authority for Advance Ruling (AAR) has held that the Input Tax Credit (ITC) is admissible upon purchase of vehicles modified and supplied as ambulances.

The applicant Raminfo Limited had submitted that they had a new business opportunity at hand and they would like to understand the provisions related to; the business which they intended to undertake. They had a work order for supply of Mobile common service centres" from the State government department, which were 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 were required to do necessary modifications to the vehicle to enable the vehicle to use it as Mobile common service centres. Modified Vehicles (Mobile Common Service Centres) would be supplied to the end user/customer.

In the above case they need clarity on the following matters for their understanding and to run the business in a smooth manner. a) Classification of goods or services or both; b) Rate of GST for the supply of goods or services or both; c) Applicability of a notification issued under the provisions of this Act; d) Determination of the liability to pay tax on any goods or services or both; e) Admissibility of Input Tax Credit on purchase of vehicles.

The applicant had raised a question as to whether the input tax credit on purchase of vehicles and other components would be admissible or not.

Tirupati Reddy, appeared on behalf of the applicant.

The two-member Bench of S.V. Kasi Visweswara Rao, (Additional Commissioner (State Tax)) and Sahil Inamdar, (Additional Commissioner (Central Tax)) observed that the applicant had submitted that they procure Maruti Suzuki Eeco (7 seater vehicle) and modify the same in their workshop at Hyderabad, Telangana State into an ambulance and make inter-State supplies of those modified vehicles to Tripura.

As per Section 17(5)(a) of Central Goods and Service Tax (CGST) Act’2017 the ITC on purchase of such vehicles which were meant for further supply of such motor vehicles was not a blocked credit as the definition of ‘supply’ includes sale, transfer, barter, exchange, renting, disposal or leasing of such vehicles.

The Bench held that the transaction of supply of ambulances to the government of Tripura was an interstate supply which attracted tax under IGST head. The rate of tax applicable to the commodity under HSN 8703 is 28% for all transactions after 30.09.2021.

Further they were held to be eligible for taking input tax credit on the tax charged on any supply of goods or services which were used or intended to be used in the course of furtherance of this business provided the applicant fulfils the conditions for availment of ITC as detailed in provisions of Section 16 of Central Goods and Service Tax (CGST) Act’2017.

To Read the full text of the Order CLICK HERE

Support our journalism by subscribing to Taxscan premium. Follow us on Telegram for quick updates