Applicant: Prasar Bharti Broadcasting Corporation of India (All India Radio), Shimla
Facts of the case
The applicant is a public service broadcaster. The taxpayer avails services of hiring taxis for different purposes as mentioned below:
- To pick up/drop shift duty staff in odd hours,
- This facility is being provided in odd hours to lady employees, handicapped & general employees.
- Taxis are hired for tour/OB recordings etc. within the state of Himachal Pradesh on different occasions.
- Taxis are also hired to drop shift staff at High Power Transmitter during morning/ evening & for office work during any time.
Questions on which Advance Ruling sought by applicant:
Applicable GST rate on renting of motor cab service.
Whether ITC will be available to the recipient on the renting of motor cab service for transporation of employees?
Discussion and Findings
As per section 16 of the CGST Act, 2017, every registered person shall, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business. However, on this availment of input tax credit (ITC), there are exceptions prescribed under section 17(5) of the CGST Act, 2017, which provides as under:
17(5) : 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) …………………………………………………….
(b) the following supply of goods or services or both—
i. food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, leasing, renting or hiring of motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa) except when used for the purposes specified therein, life insurance and health insurance:
Provided that the input tax credit in respect of such goods or services or both shall be available where an inward supply of such goods or services or both is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply;
ii. membership of a club, health and fitness centre; and
iii. travel benefits extended to employees on vacation such as leave or home travel concession:
“Provided that the input tax credit in respect of such goods or services or both shall be available, where it is obligatory for an employer to provide the same to its employee under any law for the time being in force.”
The applicant has not been able to cite any law under which the services of providing the facility of transportation to his employees is obligatory under any law, therefore ITC will not be available to him.
R U L I N G
The applicable rate of tax on renting of cabs as per Notification No. 20/2017 dated 22.08.2017 is 5% with limited ITC (of input services in the same line of business) and 12% with full ITC.
If the facility provided by a taxpayer for transportation of employees is not obligatory under any law, for the time being in force then no ITC will be available to such a taxpayer. The applicant will however be eligible to claim ITC for the service supplied at 12% GST Rate if the conditions laid down in the second proviso to section 17(5)b are satisfied.
http://gstcouncil.gov.in/sites/default/files/ruling new/HP_AAR_01_2020_19.05.2020_PBBCI.pdf