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With effect from 01.12.2019, input tax credit is allowed on GST charged by service provider on hiring of bus/motor vehicle having seating capacity of more than thirteen person for transportation of employees to & from workplace

Input Tax CreditSection 16 of CGST Act— In the instant case, applicant is seeking an advance ruling in respect of the following questions.

1. Whether input tax credit (ITC) available to Applicant on GST charged by service provider on hiring of bus/motor vehicle having seating capacity of more than thirteen person for transportation of employees to & from workplace?

2. Whether GST is applicable on nominal amount recovered by Applicants from employees for usage of employee bus transportation facility in non-air conditioned bus?

3. If ITC is available as per question no. (1) Above, whether it will be restricted to the extent of cost borne by the Applicant (employer)?

Held that—
1) it is clear and apparent that Section 17(5) had clearly debarred Input Tax Credit on motor vehicles or conveyances used in transport of passengers till the date of the amendment i.e. 01.12.2019. However with effect from 01.12.2019, Input Tax Credit has been allowed on leasing, renting or hiring of motor vehicles, for transportation of persons, having approved seating capacity of more than thirteen persons (including the driver)

2) Since the applicant is not supplying any services to its employees, in view of Schedule III , we are of the opinion that GST is not applicable on the nominal amounts recovered by Applicants from their employees in the subject case

3) The applicant, citing the decision of the Hon’ble High court of Bombay in the case of CCE Nagpur vs Ultratech Cements Ltd as reported in 2010 (260) ELT 369 (Bom) has submitted that ITC is not admissible to Applicant on part of cost borne by employee and thus ITC will be restricted to the extent of cost borne by the Applicant.—Tata Motors Limited, In Re…. [2020] 27 TAXLOK.COM 096 (AAR-Maharashtra)