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ITC not eligible on vehicles purchased to use as mobile cotton labs

In re Indian Cotton Solutions.Com Private Limited (GST AAR Andhra Pradesh)

Whether they can utilize /refund the ITC which is readily available in GST Portal, for the vehicles purchased by them for the purpose of their core business activity?

It is submitted that the firm purchased five vehicles to use as mobile cotton labs, for the purpose of testing of quality of cotton. It is argued that. the business itself is testing and the lab (launched on vehicles) are to be considered as prime business components, without which there can not be any supply of services. Hence to be considered as eligible  for ITC.

Input Tax Credit on the vehicles purchased by the applicant for the purpose of their business will fall under Sec.17(5). The text of Sec 17(5) is as under-

“Notwithstanding anything contained in sub-section (1) of section 16 and subsection (1) of section 18. input tax credit shall not be available in respect of the following, namely:— (a) motor vehicles and other conveyances except when they are used— (i) for making the following taxable supplies, namely:— (A) further supply of such vehicles or conveyances ; or (B) transportation of passengers: or (C) importing training on driving. flying, navigating such vehicles or conveyances; (ii) for transportation of goods”.

It is clear from the plain reading of the section. that the goods referred by the applicant do not fall under the exceptions referred in Sec.17(5) of CGST/APGST Act’2017. Hence the applicant is not entitled for claim of ITC.

FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, ANDHRA PRADESH

M/s INDIAN COTTON SOLUTIONS.COM PRIVATE LIMITED. (hereinafter also referred as applicant). having GSTIN:3/AADCI7003DIZZ are engaged in supply of service by providing Mobile Laboratory Services, to test the quality of Cotton.

The applicant has filed an application in form GST ARA-01. doled 20.03.2018, for seeking advance ruling on ‘Admissibility of input tax credit of tax paid or deemed to hove been paid’. the question is as follows..

“Whether they can utilize refund The ITC which is Readily available in GST Portal, for the vehicles purchased by them for the purpose of their core business activity?”

On verification of basic information of the applicant if is observed that the applicant falls under State jurisdiction. i.e. Brodipel Circle. of Narasraopet Division/as per the bifurcation lists of tax payers between the Centre and State in the prescribed manner ), accordingly. the application has been forwarded to the jjurisdictional officers and also o copy marked to the Central tax authorities to offer their remarks as per the Sec. 98(1) of CGST/APGST Act’2017, and requested for the information.

In response to this communication. the concerned jurisdictional officer, offered their remarks. and stated that there were no proceedings pending relating to the applicant, and no proceedings  were passed on the issue. for which the advance ruling sough by the applicant.

A personal hearing is called for on 04.04.2018. to hear from the applicant Sri. M.Gopi Krishna, authorized representative hod attended on behalf of the applicant and submitted the facts of case. It is submitted that the firm purchased five vehicles to use as mobile cotton labs, for the purpose of testing of quality of cotton. It is argued that. the business itself is testing and the lab (launched on vehicles) are to be considered as prime business components, without which there can not be any supply of services. Hence to be considered as eligible  for ITC.

We have gone through the application filed by the applicant, and after careful examination of the said issue. this authority is of the opinion. that the Input Tax Credit on the vehicles purchased by the applicant for the purpose of their business will fall under Sec.17(5), and given the ruling accordingly. The text of Sec 17(5) is as under..

“Notwithstanding anything contained in sub-section (1) of section 16 and subsection (1) of section 18. input tax credit shall not be available in respect of the following, namely:— (a) motor vehicles and other conveyances except when they are used— (i) for making the following taxable supplies, namely:— (A) further supply of such vehicles or conveyances ; or (B) transportation of passengers: or (C) importing training on driving. flying, navigating such vehicles or conveyances; (ii) for transportation of goods”.

RULING

It is clear from the plain reading of the section. that the goods referred by the applicant do not fall under the exceptions referred in Sec.17(5) of CGST/APGST Act’2017. Hence the applicant is not entitled for claim of ITC.

View Comments (1)

  • THIS IS RECYCLED DECOITY TO THE DEALERS BY THE GOVERNMENT.IF A DEALER PURCHASE A VEHICLE AND USED IT THEIR GOODS DELIVERY ITS TOTALLY BELONGS TO BUSINESS ACTIVITIES.
    WHY? ITC NOT VAILABLE.

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