In Re : CMS Info System Limited
GST
2018 (5) TMI 649 – AUTHORITY FOR ADVANCE RULING – MAHARASHTRA – 2018 (13) G. S. T. L. 486 (A. A. R. – GST), [2018] 2 GSTL (AAR) 73 (AAR)
AUTHORITY FOR ADVANCE RULING – MAHARASHTRA – AAR
Dated:- 19-3-2018
GST-ARA-08/2017/B-11
GST
Shri B.V. Borhade, Joint Commissioner of State Tax and Shri Pankaj Kumar, Joint Commissioner of Central Tax
PROCEEDINGS
(under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017)
The present application has been filed under section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as “the CGST Act and MGST Act”] by M/s. CMS Info Systems Limited, the applicant, seeking an advance ruling in respect of the applicability of GST on:
1. Whether supply of such motor vehicles as scrap after its usage can be treated as 'supply' in the course or further
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PER THE APPLICANT
The submissions, as reproduced verbatim, could be seen thus-
“Statement of relevant facts having a bearing on the question(s) raised.
The applicant is having cash management network pan India. During the course of providing cash management services, the applicant is engaged in following activities:
* Providing ATMs and installing the same at various locations across India
* Managing cash circulation through transporting cash from currency chests to bank branches
* Cash pick up and delivery from and to dedicated banks
Such transportation of cash is done through security vans popularly known as cash carry vans. The applicant purchases raw motor vehicles and with the requisite fabrications, gets it converted to cash carry vans. The applicant also pays GST on fabrication. For this purpose, the applicant purchases motor vehicles and pays GST (Goods and Services tax). Credit of such GST is not availed by the Applicant presently. While purchasing cash carry vans un
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t is supplying motor vehicles as scrap after using the same. Therefore, the issue raised is whether such transaction can be considered to be 'supply' in the eyes of GST Law. In this regard, it would be worth analysing Section 7 of Central GST Act, 2017 which reads as under:
“Section 7. Scope of supply
(1) For the purposes of this Act, the expression “supply” includes
(a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business;
(d) the activities to be treated as supply of goods or supply of services as referred to in Schedule II.”
On analysing the above definition, it may be observed that only when the transaction is in the course or furtherance of business, the transaction would be treated as supply.
For reaching to a conclusion whether the transaction is supply or not, it is important is to understand
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profession or vocation;
(h) services provided by a race club by way of totalisator or a licence to book maker in such club ; and
(i) any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities;”
Clause (c) of the above definition may cause certain doubts that even if a stray transaction of selling scrap is covered under the definition of 'business'. However, it is very important to note that Clause (c) refers that such activity or transaction should be in the nature of any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity. Therefore, it is very important that to call some transaction/activity as business, it has to be in the nature of any 'trade', 'commerce' etc.
The terms trade or commerce are not defined in GST law and therefore, recourse may be taken to dictionaries. Trade:
Cambridge dictionary: “the activity o
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selling old gold jewellery is not the business of the said individual). and hence does not qualify to be a supply per se. Accordingly the sale of gold jewellery by an individual to a jeweller will nor attract The provisions of section 9(4) and jeweller will not be liable to pay tax under reverse charge mechanism on such purchases. However, if an unregistered supplier of gold ornaments sells it to registered supplier, the tax under RCM will apply ”
From the above clarification given by the Finance Ministry, it clearly appears that the intention of Government is not to treat all the transactions as 'supply' unless the same are carried in the normal course of business activities which are carried with an intention to engage supplier into the activities of buy and sell of relevant commodities/services.
Another important point which needs to be noted is certain activities are deemed to be 'supply' when specified in Schedule I. Clause I of Schedule I reads as under:
&nbs
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used for cash management business and supplied post usage as scrap?
In any case, if the stray transaction of sell of cash carry van is considered to be supply then the bar of taking input tax credit under Section 17 (5) would not be applicable.
The relevant extract of Section 17 (5) reads as under:
“Section 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) 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) imparting training on driving, flying, navigating such vehicles or conveyances;
[Emphasis supplied]
The exception provided in clause (a) above stipulates that if the motor vehicles are used for making further taxable supply of such vehicles, input tax credit is availa
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“purposive interpretation. It is well settled law that while interpreting a statute the basic principle of literal rule of interpretation has to be followed. In light of the above submission, Applicant rely on the decision of Hon'ble Supreme Court in the case of B. Premanand v. Mohan Koikal, 2011 (3) TMI 1590 – SUPREME COURT = (2011) 4 SCC 266 , which is binding upon the Advance Ruling Authority also. The relevant portion of the said decision is as follows:
“9. It may be mentioned in this connection that the first and foremost principle of interpretation of a statute in every system of interpretation is the literal rule of interpretation. The other rules of interpretation e.g. the mischief rule, purposive interpretation etc. can only be resorted to when the plain words of a statute are ambiguous or lead to no intelligible results or if read literally would nullify the very object of the statute. Where the words of a statute are absolutely clear and unambiguous, recourse cannot be
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transportation of passengers; or
(C) imparting training on driving, flying, navigating such vehicles or conveyances;
(ii) for transportation of goods;
(b)
[Emphasis supplied]
2) The term “goods”, “money” and “motor vehicle” have been defined as per Section 2 of the said act, as follows:
“Sec. 2 – In this act unless the context otherwise requires.
(52) “goods” means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply;
(75) “money” means the Indian legal tender or any foreign currency, cheque, promissory note, bill of exchange, letter of credit, draft, pay order, traveller cheque, money order, postal or electronic remittance or any other instrument recognised by the Reserve Bank of India when used as a consideration to settle an obligation or exchang
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2017 is chargeable to Goods and Services Tax;
d. The Applicant on perusal of the provision of Law stated above wishes to claim Input Tax Credit paid on purchase of such vehicles based on following interpretation
– As per provisions of Section 16 of the CGST Act – Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, 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. As the applicant is going to use the said vehicle in furtherance of the business of transporting valuables (cash and bullion), we feel Input Tax Credit shall be available relying provisions of Section 17(5)(a)(ii) (supra);
– The applicant feels the valuables (cash and bullion) as transported is goods and not money in the given context. The applicant is given a consignment by the
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ischarge of the debts and full payment for commodities; being accepted equally without reference to the character or credit of the person who offers it. and without the intention of the person Who receives it to consume it or apply it to any other use than In turn to tender it to others in discharge of debts or payment for commodities.: (per DARLING, J. Moss v Nancock, 68 LJQB 660 1899-22 B 111)- Reference – Advanced Law Lexicon, P Ramnatha Aiyar's – 4th Edition.
Therefore, the purpose of excluding money from these definitions is not to charge GST on mere supply of money.
4) Without prejudice to above submissions, we would like to further submit the following;
a. Reference is made to Central Goods and Services Tax Rules, 2017 ('CGST Rules') in relation to E-way bills. E-way bills Rules have been introduced in the GST regime vide Notification No. 27/2017 – Central Tax dated 30.08.2017, to monitor movement of goods from one location to anoth
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truments as may be notified by the Reserve Bank;
Accordingly, with reference to the above definition of the term currency, it may be noted that currency includes, inter alia, currency notes, cheques, draft.
b. It is pertinent to note that the words used in the CGST rules are -'goods being transported”. Thus, e-way bill is not required to be generated when currency is transported. It may be appreciated that in spite of specific exclusion of money from the definition of goods, currency is considered as goods in the Annexure, Further, even in the case of applicant, currency is being 'transported' in a secured vehicle by the applicant.
c. Accordingly, 'currency' should be treated as goods, And as the Applicant is transporting currency in the secured vans, which is treated as goods as per the said CGST Rules/ Notification, therefore applicant shall be eligible for input tax credit of CGST, MGST, IGST and Compensation Cess with respect to cash c
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sing of 'goods'. Here, It would be worthwhile to take note of decision delivered by Hon'ble Supreme Court under the erstwhile Central Sales Tax ('CST') Act, 1956. In case of Printers (Mysore) Ltd. vs. Asstd. Commissioner Tax Officer 1994 SCC (2) 434 = 1994 (2) TMI 261 – SUPREME COURT OF INDIA (copy attached for your reference as Annexure the issue on hand was 'newspaper' was excluded from the definition or 'goods' under CST Act, 1956. Consequently, department expressed the view that 'C' form would not be available for buying newsprint for printing newspapers. In other words, the purchasers were required to pay higher rate of tax and benefit of concessional rate of CST was not available to them. Having regard to the intention of exclusion of 'newspaper' from the definition of goods, Hon'ble Supreme Court observed that the definition of 'goods' was amended to adhere to Constitution of India i.e. not to levy CST on sale of ne
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y a vehicle except living persons. but does not include luggage or personal effects carried in a motor car or in trailer attached to a motor car or the personal luggage of passengers travelling in the vehicle.
On analysing the above definition, it can be observed that under Motor Vehicles Act, goods includes money and consequently, all cash carry vans of the applicant are considered as 'goods carriage'
Therefore, though there is express definition given in Central GST Act, 2017 for goods, the term 'goods' shall include 'money' for the purpose of Section 17 (5) (a) of Central GST Act. Consequently, the applicant Shall be eligible for input tax credit of CGST, MGST, IGST and Compensation Cess with respect to cash carry vans.
7) Cash carry vans are also used for transportation of gold i.e. goods and therefore, Input tax Credit thereof shall be available to the applicant.
In the present case, the Applicant provides various cash management services in
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llery from one branch of the bank to safe vault where such gold is stored safely. Therefore, one needs to analyse Section 17 (5) of Central GST Act, 2017 in this factual matrix. The said Section is reproduced hereunder:
“Section 17 Apportionment of credit and blocked credits
(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) 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) imparting training on driving, flying, navigating such vehicles or conveyances;
(ii) for transportation of goods;
[Emphasis supplied]
Therefore, as per the above provision, input tax credit is available in respect of motor vehicles and other conveyances when they are used for transportation of 'goods
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xure 'C' ,
There is no dispute to the fact that gold and silver are nothing but goods. In common parlance, gold is not considered as money; but a commodity which is capable of being bought and sold. Accordingly, gold and silver are movable properties squarely falling within the definition of 'goods'
Therefore, these cash carry vans are also used for transportation of gold and other valuable goods. Consequently, as per Section 17 (5) of Central GST Act, 2017, the input tax credit of CGST, MGST, IGST and Compensation Cess shall be available to the applicant.
In view of the above, we request you to pass a suitable Advance Ruling stating Input Tax Credit shall be eligible in respect of GST/Cess paid on purchase of cash carry vans to the Applicant
03. CONTENTION – AS PER THE CONCERNED OFFICER
The submission, as reproduced verbatim, could be seen thus-
” (3) The Point wise comments are as follows:-
(i) AS per Section 7(1)(a) the activity of supply of vehicl
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of CGST Act, activities or transactions which shall be treated neither as a supply of goods nor a supply of services.
Schedule-III of the Act gives: –
(i) Services by an employee to the employer in the course of or in relation to his employment.
(ii) Services by any court or Tribunal established under any law for the time being in force.
(iii). (a) the functions performed by the Members of Parliament, Members of State Legislature, Members of Panchayats, Members of Municipalities and Members of other local authorities;
(b) the duties performed by any person who holds any post in pursuance of the provisions of the Constitution in that capacity; or
(c) the duties performed by any person as a Chairperson or a Member or a Director in a body established by the Central Government or a State Government or local authority and who is not deemed as an employee before the commencement of this clause.
(iv) Services of funeral, burial, crematorium or mortuary including transportation of the
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es that;
“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) imparting training on driving, flying, navigating such vehicles or conveyances;
(ii) for transportation of goods;
Since the applicant is engaged in cash management services and the same does not fall within exceptional cases as mentioned above including clause (ii) of Section 17(5) (a) because as per definition of goods in Section 2(52) of CGST Act, 2017 “goods” means 'every kind of movable property other than money and securities but includes actionable claim, growing Crops, grass and things attached to or forming part of the land which are agreed to be severed befo
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sion was tendered during hearing and a request was made to make a further submission. The same has been tendered. None was present on behalf of the concerned officer from the Central Tax Office. However, a written submission has been furnished.
05. OBSERVATIONS
We have gone through the facts of the case. Lt has been informed thus –
* The applicant is having cash management network pan India. Such transportation of cash is done through security vans popularly known as cash carry vans.
* The applicant purchases raw motor vehicles and with the requisite fabrications, gets it converted to cash carry vans. For this purpose, the applicant purchases motor vehicles and pays GST and also pays GST on fabrication.
* While purchasing cash carry vans under pre-GST era, the applicant had paid Central Excise Duty as well as Value Added tax. When these vans cannot be used further, the applicant sells these motor vehicles as scrap.
* In certain cases, instead of purchasing motor v
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, continuity or regularity of such transaction;
(d) supply or acquisition of goods including capital goods and services in connection with commencement or closure of business;
(e) provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members;
(f) admission, for a consideration, of persons to any premises;
(g) services supplied by a person as the holder of an office which has been accepted by him in the course or furtherance of his trade, profession or vocation;
(h) services provided by a race club by way of totalisator or a licence to book maker in such club ; and
(i) any activity or transaction undertaken by the Central Government, a State Government or any local authority in which they are engaged as public authorities;
7. (l) For the purposes of this Act, the expression “supply” includes-
(a) all forms of supply of goods or services or both such as sale, transfer, barter, exchang
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ash management network. As and when the vehicles become scrap, they have to be disposed off and the proceeds therefrom to be identified as income for the business which is reflected in the Profit & Loss Account of the business. Buying new assets and discarding the old and unusable assets is an activity in the course of carrying on of the business. Hence, we conclude that supply of such motor vehicles as scrap after its usage is an activity of 'supply' in the course or furtherance of business and such transaction would attract GST. However, we see that the applicant has referred to the following to make a claim that the impugned transaction would not be a 'supply' under the GST Act
SCHEDULE I [see section 7] – ACTIVITIES TO BE TREATED AS SUPPLY EVEN IF MADE WITHOUT CONSIDERATION
1. Permanent transfer or disposal of business assets where input tax credit has been availed on such assets.
SCHEDULE II [See section 71 – ACTIVITIES TO BE TREATED AS SUPPLY OF GOODS OR SUPPLY
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r the reason that they lack the crucial element of 'consideration'. As regards Schedule IL the same classifies the supplies into supplies of goods or services. Schedule Il begins with the premise that the activities are 'supply'. For the facts before us, we find that there is a supply of cash vans, which are ' goods', for a consideration and the transaction is in the natural course of business. The transaction and the provisions are obvious. In view thereof, we do not find merit in the argument of the applicant.
Having seen that the transaction amounts to a 'supply' under the GST Act, we move on to the next aspect which the applicant desires to know and which is the rate of GST and Compensation Cess. Chapter 87 of the Customs Tariff covers motor vehicles. The applicant has not informed the Customs/ Excise Tariff Heading, Neither has any copy Of the invoice effecting the supply been tendered. The applicant has submitted a sample agreement copy which it e
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able to CST at various rates –
a. Schedules I to III and V to VI do not cover the impugned goods.
b. Entries in Schedule IV would cover the impugned goods.
3. Notification No.1/2017-Compensation Cess (Rate) (as amended from time to time) enlisting the goods taxable to Compensation Cess under the Goods and Services Tax (Compensation to States) Act, 2017 at various rates –
a. This Notification enlists goods from the Chapter 87.
In absence of the requisite details before us, we have to ask the applicant to go through the Notification No.1/2017-CentraI/State Tax (Rate) and Notification No. 1/2017-Compensation Cess (Rate), as amended from time to time. We would now turn to the next question.
Question 2
If the answer to Question 1 is in affirmative, whether Input tax Credit is available to CMS Info Systems Ltd. ('CMS' or 'the applicant') on purchase of motor vehicles i.e. cash carry vans which are purchased, used for cash
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under the provisions of the Income-tax Act, 1961 (43 of 1961), the input tax credit on the said tax component shall not be allowed.
Section 17 – Apportionment of credit and blocked credits.
(1) Where the goods or services or both are used by the registered person partly for the purpose of any business and partly for other purposes, the amount of credit shall be restricted to so much of the input tax as is attributable to the purposes of his business.
(2) Where the goods or services or both are used by the registered person partly for effecting taxable supplies including zero-rated supplies under this Act or under the Integrated Goods and Services Tax Act and partly for effecting exempt supplies under the said Acts, the amount of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies including zero-rated supplies
(5) Notwithstanding anything contained in sub-section (1) of section 16 and subsection (1) of section 18, input tax
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uch goods determined under section 15.
As can be seen from the above, except in certain situations as enumerated, ITC is not available in respect of motor vehicles. Hence, I see the exceptions.
As can be seen, the impugned activity of providing cash management services not being for transportation of passengers OR for imparting training on driving, flying, navigating such vehicles or conveyances, it would not be covered by the exceptions in (B) and (C) of sub-section 5(a)(i). Sub-section 5(a)(i)(A) is about making “further supply of such vehicles or conveyances”. The words “further supply” herein are m the nature of “resale”. It should be noted that it is not mentioned as being just “supply of such vehicles or conveyances”. The word “further” before the word “supply” has to be given its proper weightage. Here, the legislature intends to cover motor vehicles which are purchased for the purpose of being sold. In this category, we have the chain of the distributors/ dealers of motor veh
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ion which speaks about exception if the motor vehicles are used for transportation of goods. The word 'goods' has been defined thus –
“Definitions. 2. In this Act, unless the context otherwise requires,-
(52) “goods” means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply;
(75) “money” means the Indian legal tender or any foreign currency, cheque, promissory note, bill of exchange, letter of credit, draft, pay order, traveller cheque, money order, postal or electronic remittance or any other instrument recognised by the Reserve Bank of India when used as a consideration to settle an obligation or exchange with Indian legal tender of another denomination but shall not include any currency that is held for its numismatic value;
I find that the applicant has also mentioned that bes
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oney'.
The applicant has cited the case law in Printers (Mysore) Ltd. And Another V. Assistant Commercial Tax Officer And Others. (Civil Appeal No. 1550 of 1985). Indian Newspapers Society V. State of Karnataka. (Writ Petition No. 278 of 1991). (And Other Appeals) [93 STC 95]. We could look at the facts and the decision in this case thus –
“The publishers of newspapers require various goods, here inafier referred to as “the raw material”, for producing, i. e., for printing and publishing their newspapers. The publishers are registered as dealers under the Act. They purchase their raw material from other registered dealers. Most of these purchases are inter-State purchases; m the hands of the selling dealers they are inter-Stale sales exgible to tax.
Section 8, read as a whole, says, inter alia: where a dealer purchases goods (being non-declared goods) required by him for use in the manufacture or processing of goods for sale and issues form “C” to the selling dealer, the selling
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er alia, in the manufacture or processing of goods for sale. Of declared goods, the selling dealer has to pay tax at the rate applicable to sale of such goods within the appropriate State.). It necessarily means that the selling dealer will collect (pass on) tax from the purchasing dealer only at the said concessional rate. The idea behind this provision is self-evident. It is to ensure that the price of the product manufactured by such purchasing dealers does not go up to the detriment of the consumers of those goods. The Parliament does not want to tax both the raw material and the finished goods at the full rate. Where the finished goods are meant for sale, the raw material utilised or consumed for the manufacture of said finished goods is taxed at the concessional rate, for the reason that the State derives revenue again by taxing the sale of the finished goods. However, it is not necessary that the finished goods are actually subjected to tax on their sale-for they may be exempted
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on is this: before the amendment of the definition of the expression “goods” by the 1958 Amendment Act, the publishers of the newspapers [who held the certificate of registration contemplated by section 8(3)(b)] were issuing forms “C” [declarations contemplated by section 8(4)(a)] and on that basis the selling dealer was collecting from them Central sales tax at the concessional rate of 4 per cent (in the case of non-declared goods). They were like any other manufacturers in this respect. But after newspapers were excluded from the purview of the “goods” by the 1958 (Amendment) Act, the Central sales tax authorities took the stand that by virtue of the said amended definition, the printers/publishers of newspapers were not entitled to the benefit of section 8(3)(b) read with section 8(1)(b) and are, therefore, not entitled to issue forms “C”. Their reasoning was this: since the expression “goods” does not take in newspapers, it cannot be said that publishers of newspapers are purchasin
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ution and hold on that basis that the expression “goods” occurring in the latter half of clause (b) of section 8(3) does not exclude newspapers from its purview
[clause (b) of sub-section (3) :
“The goods referred to in clause (b) of sub-section (1) are goods of the class or classes specified in the certificate of registration of the registered dealer purchasing the goods as being intended for resale by him or subject to any rules made by the Central Government in this behalf, for use by him in the manufacture or processing of goods for sale or in mining or in the generation or distribution of electricity or any other form of power.”……
Now coming back to the amendment of the definition of “goods” in section 2(d) of the Central Sales Tax Act, the said amendment, brought in with a view to bring the said definition in accord with the amendments brought in by the Constitution (Sixth Amendment) Act (referred to hereinbefore) was actuated by the very same concern, viz., to exempt the
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efined in section 2(d). In other words, the “goods” referred in the first half of clause (b) in section 8(3) refers to what may generally be referred to as raw material (in cases where they were purchased by a dealer for use in the manufacture of goods for sale) while the said word “goods” occurring for the fourth time (i.e., in the latter half) cannot obviously refer to raw material. It refers to manufactured “goods”, i.e., goods manufactured by such purchasing dealer-in this case, newspapers. If we attach the defined meaning to “goods” in the second half of section 8(3)(b), it would place the newspapers in a more unfavourable position than they were prior to the amendment of the definition in section 2(d). It should also be remembered that section 2 which defines certain expressions occurring in the Act opens with the words “in this Act, unless the context otherwise requires”. This shows that wherever the word “goods” occurs in the enactment, it is not mandatory that one should mecha
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goods which they required for printing and publishing newspapers. Their position could not be worse after the amendment which would be the case if we accept the contention of the Revenue. If the contention of the Revenue is accepted, the newspapers would now become liable to pay tax at 10 per cent on non-declared goods as prescribed in section 8(2). This would be the necessary consequence of the acceptance of Revenue's submission inasmuch as the newspapers would be deprived of the benefit of section 8(3)(b) read with section 8(1)(b). We do not think that such was the intention behind the amendment of definition of the expression “goods” by the 1958 (Amendment) Act. Even apart from the opening words in section 2 referred to above, it is well-settled that where the context does not permit or where it would lead to absurd or unintended result, the definition of an expression need not be mechanically applied.”
It can be seen from the above case law that the Hon. Court went into
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that effect such a qualification is always implied.
18. There is no dispute with the proposition that the meaning of a word or expression defined may have to be departed from on account of the subject or context in which the word had been used and that will be giving effect to the opening sentence in definition section, namely, “unless the context otherwise requires”. In view of this qualification, the court has not only to look at the words but also to look at the context, the collocation and the object of such words relating to such matter and interpret the meaning intended to be conveyed by the use of the words in a particular section. But where there is no obscurity in the language of the section, there is no scope for the application of the rule ex visceribus actus. This rule is never allowed to alter the meaning of what is of itself clear and explicit. The authorities relied upon by the High Court are, therefore, not applicable.”
Thus, the Hon. Courts have laid down that the co
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ifying the Schedule for goods exempted specifying the goods “Rupee notes when sold to the Reserve Bank of India”. Notes become legal tender after they are issued by the Reserve bank of India. Till that time they are mere printed papers and not 'money' or 'currency' and hence, they are held exigible to GST, though at a NIL rate. In the present case, the ITC would be available when the motor vehicles are used for transportation of goods. Here, the ITC is of the tax paid in respect of the purchase of the motor vehicles and not Of the goods being transported. To restrict the ITC here to the case when only 'goods' as understood in GST are being transported in the motor vehicles would not be in the context of the provision. The applicant has rightly invited attention to the definition of 'goods' as appearing in the Motor Vehicles Act, 1988 which says thus –
(13) “goods” includes livestock, and anything (other than equipment ordinarily used with th
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eration of the above, the impugned activity of providing cash management services involves use of the motor vehicles for transportation of 'goods'. The motor vehicles would be covered by the exception in sub-section 5(a)(ii) of section 17. Thus, the applicant would be entitled to the ITC on the purchase of the cash carry vans i.e motor vehicles used for transportation of goods, subject to the provisions of the Rules made in this regard.
As per Sh. Pankaj Kumar, Member
This question pertains to the eligibility to avail Input Tax Credit (ITC) on the purchase of cash carry vans which are used for the cash management business. I have seen above that the disposal of the cash carry vans as scrap vehicles is a 'supply' in the course of furtherance of business and is amenable to GST. In view thereof, the applicant queries as to whether ITC would be available on the purchase of cash carry vans which are later disposed off as scrap, For answering this, I would have to refer to
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nt of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies including zero-rated supplies.
(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) 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) imparting training on driving, flying, navigating such vehicles or conveyances;
(ii) for transportation of goods;
(6) In case of supply of capital goods or plant and machinery. on which input tax credit has been taken, the registered person shall pay an amount equal to the input lax credit taken on the said capital goods or plan,' and machinery reduced by such percentage points as may be prescribed or the tax on the transac
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The word “further” before the word “supply” has to be given its proper due. Here, the legislature intends to cover motor vehicles which are purchased for the purpose of being sold. In this category, we have the chain of the distributors/ dealers of motor vehicles who purchase from the manufacturers for the downward sale to the final customer. The use of the word “further” is indicative of a further supply and not such a supply as in the present case which is the disposal as a scrap and which happens after the motor vehicle has been used till its full working life. In view thereof, the impugned activity of providing cash management services not being for making a further supply of the motor vehicles would not be covered by the exception in (A) of sub-section 5(a)(i). I find that the applicant has argued that as per well-settled principle of law at first one has to apply “literal interpretation” and only in cases of absurd results, one has to apply “purposive interpretation”. However, th
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ank of India when used as a consideration to settle an obligation or exchange with Indian legal tender of another denomination but shall not include any currency that is held for its numismatic value;
I find that the applicant has also mentioned that besides i cash', the cash carry vans are also used for transport of bullion. Bullion not being excluded from the definition of ' goods' , there arises no issue. However, the applicant has raised the question in terms of 'cash carry vans' and hence, “cash” would be the goods which would be transported. “Cash” here is the Indian legal tender which is 'money' and I find that 'money' has been excluded from the definition of 'goods' for the purposes of the GST Act. However, it is found that the applicant has specifically mentioned in his application that they are engaged in “cash management service” which they have specifically mentioned as under :
* Providing ATMs and installing the sam
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as under :-
(52) “goods” means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply;
Thus from the above definition of 'goods', it very clear that 'money' is specifically excluded from the definition of 'goods' and therefore in no way input tax credit in respect of motor vehicles and other conveyances as envisaged in Section 17(5) (a) would be available in respect of transportation of money in motor vehicles as under GST law as money is specifically excluded from the definition of 'goods' and therefore 'money' is not to be treated as 'goods' because of specific exclusion.
The intent of the legislature in excluding 'money' from the definition of 'goods' can also be visualized from a situation wherein if a person 'X' eng
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:-
(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) imparting training on driving, flying, navigating such vehicles or conveyances;
(ii) for transportation of goods;
We see that legislative intent to allow input tax credit in respect of vehicles is very restrictive and requires to be interpreted accordingly and credit in respect of motor vehicles shall not be available except to the four persons/entities as enumerated above when there is specific exclusion of 'money' from being considered as goods in GST Act and provisions. The judgement of the Hon'ble Supreme Court in the case of Printers (Mysore) Ltd Vs Asst. Commercial Tax Officer (cited supra) as referred by the applicant is in respect of very different statute i.e. the Central Sales Tax Act,1956 wherein the issue was whether purchase and use o
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e was no intent to not to treat newspapers as 'goods' but the only intent was to put them out of Sales Tax liability and Hon'ble Supreme Court has rightly interpreted as per intent and context of the Central Sales Tax statute.
However when we see definition of 'goods' as given in the GST Act, we see that the definition of 'goods' is as under –
(52) “goods” means every kind of movable property other than money and securities but includes actionable claim. growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply;
We see that it specifically gives the exception that under the GST Act, 'money' will not be considered as ' goods' for the provisions of GST and therefore, in respect of GST Act wherever the word 'goods' comes it will specifically mean that money would not be covered in the same. The intent of legislature is further confirmed from the e
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a) (ii) of the GST Act which is reproduced as under –
(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) 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) imparting training on driving, flying, navigating such vehicles or conveyances;
(ii) for transportation of goods;
And therefore, transportation of money is not covered in section 17(5)(a) (ii) of the GST Act and the applicant is not eligible for availing input tax credit in respect of motor vehicles used in transport of money.
06. In view of the detailed deliberations held hereinabove, it is ordered thus –
ORDER
(under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Se
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