The Authority for Advance Ruling(AAR), Himachal Pradesh ruled that no Input Tax Credit (ITC) will be available for a registered taxpayer renting transportation for employees which is not obligatory under any law, for the time being in force.
The applicant Prasar Bharti Broadcasting Corporation Of India (All India Radio), Shimla is a public service broadcaster who entered into an agreement for hiring commercially licensed vehicles for the transportation of his employees. The applicant sought Advanced Ruling on whether ITC would be available for the said activity and the rate of GST applicable to the same.
The AAR consisting of Joint Commissioner of Central Tax Abhay Gupta and Additional Commissioner of State Tax Rakesh Sharma after examining S. 17(5)b of CGST Act ruled that the transportation of employees said that ITC is available only on the condition that such goods or service or both is obligatory for an employer to provide to its employees under any law for the time being in force. Since the applicant has not been able to cite any law under which the service of providing the facility of transportation to his employees is obligatory under any law, therefore ITC will not be available to him.
The AAR also clarified the applicable rate of GST on renting of cabs as per Notification No. 20/2017 dated 22.08.2015 is 5%with limited ITC and 12% with full ITC.
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