A recent ruling by the Rajasthan Authority for Advance Ruling (AAR) has clarified that Goods Transport Agencies (GTAs) can claim Input Tax Credit (ITC) on transport vehicles purchased before April 2023 under the new GST mechanism. However, the ruling does not specify the exact manner for claiming the reduced credit due to the change in tax mechanism.
The applicant agency, M/s Goru Moli, sought clarification on claiming ITC on a vehicle purchased before April 1, 2023 under the Reverse Charge Mechanism (RCM). The AAR held that the claim is available, but with a 5% reduction per quarter due to the shift to the Forward Charge Mechanism (FCM).
Beyond the eligibility for the claim, the applicant, represented by G.N. Sharma questioned the specific way they could claim this credit under the new system. In simpler terms, the question was: “In which month and in what manner a GTA should claim the ITC of the transport vehicle purchased by it on or before 31.03.2023, after 01.04.2023 i.e. the date from which the applicant will itself pay tax at 6% CGST and 6% RGST under forward charge in accordance with Section 9(1) of the CGST Act, 2017?”
The two-member bench of Additional Commissioners Mahipal Singh and Mahesh Kumar Gowla clarifies that Section 97 of the GST Act, which deals with the time and manner of claiming ITC, doesn’t directly address this specific situation. The reduction in ITC arises due to the change in tax mechanism (RCM to FCM), not because of a timing or claiming method issue covered by Section 97 of the Act.
The clarification of the authority highlights that the specific manner of claiming ITC likely falls outside the purview of the AAR’s ruling.
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