In Re: M/s. YKK India Private Limited
GST
2019 (2) TMI 1081 – AUTHORITY FOR ADVANCE RULING, HARYANA – 2019 (22) G. S. T. L. 115 (A. A. R. – GST)
AUTHORITY FOR ADVANCE RULING, HARYANA – AAR
Dated:- 11-7-2018
AAR No. HAR/HAAR/R/2018-19/04 (In Application No. 3/2018-19)
GST
SANGEETA KARMAKAR AND VIJAY KUMAR SINGH, MEMBER
Present for the Applicant: Sh Kishore Kunal, Advocate
1. M/s. YKK India Private Limited (hereinafter referred to as the “applicant”) is engaged in the business of supply of slide fasteners, chains, sliders etc. ('Zipper' or 'Final Product'). In furtherance to its business of supply of the said Final Products mentioned above, the Applicant uses various goods as well as services for which the applicable tax under the CGST Act or the relevant State Act or Union Territory Acts under GST regime or Integrated Goods and Services Tax Act, 2017 are paid to the supplier, which fall within the meaning and definition of input tax defined under Section 2(62) of
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s scheduled. It is in this regard that the Applicant enters into contract with the said suppliers for hiring buses as well as cars. In this regard, reference is made to sample contract entered between Deep Travels ('Contractor') and the Applicant, both situated in Haryana, for provision of Transportation Services (also referred to as 'Transportation Services') to its employees from various locations to Factories. The Applicant has summarised the relevant terms of the sample agreement below for ease of reference:
a. The Contractor shall provide transport Services to employees of the Applicant from Factories to Kakarwali, Rewari by way of a buses
b. The Contractor shall deploy trained personnel viz. driver and helper buses to provide transportation Services to employees of the Applicant from Factories to Kakarwali, Rewari. The said driver and helper shall be employee of the Contractor and remain under supervision and control of the Contractor.
c. The Applicant shall inter-alia pay a m
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orementioned GST payment on the invoices raised by the Contractor falls within the meaning of input tax credit under Section 2(63) read with 2(62) of the Act, the Applicant is of the view that the Applicant is eligible to take credit of the GST paid subject to fulfillment of the conditions specified in Chapter V of the Act which deals with input tax credit.
6. Questions on which ruling has been sought by the applicant, are as under:-
i. Whether the Applicant is eligible to take input tax credit on:
a. GST charged by the Contractor for hiring of buses for transportation of employees?
b. GST charged by the Contractor for hiring of cars for transportation of employees?
ii. Whether the restriction on 'Rent a Cab' service specified in Section 17(5)(b)(iii) is applicable to input tax credit on:-
a. GST charged by the Contractor for hiring of buses for transportation of employees?
b. GST charged by the Contractor for hiring of cars for transportation of employees?
RECORDS OF PER
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today.
DISCUSSIONS AND FINDINGS OF THE AUTHORITY
8. We have carefully gone through the application for advance ruling and submissions made by the applicant. The applicant is registered taxpayer and has entered into agreement for hiring commercially licensed vehicles for transportation of their employees. The question raised by the applicant is whether they are eligible to avail input tax credit of GST paid by the contractor on the services rendered by them to the applicant.
9. As per Section 16 of the of the CGST/HGST 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/HGST Act, 2017, which provides that:
(5) Notwithstanding anything contained in sub-section (1) of section 16 and subsection (1) o
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y of goods or services or both or as part of a taxable composite or mixed supply; and
(iv) travel benefits extended to employees on vacation such as leave or home travel concession;
(c)……………………
10. The point which merits examination here is that whether the impugned services are covered by the definition of “rent-a-cab” and hence ineligible for ITC. In this regard, it is observed that the phrase “rent-a-cab” has not been defined in the CGST/HGST Act, 2017. In situations where statutory meaning of any term/phrase has not been provided words, entries and items in taxing statutes must be construed in terms of their commercial or trade understanding, or according to their popular meaning. Resort to rigid interpretation in terms of scientific and technical meanings should be avoided in such circumstances, as has been held by the Hon'ble High Court of Allahabad in the case of Godrej Consumer Products Limited Vs. Commissioner of Commercial Tax [2018 (13) G.S.T.L. 135 (Al
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riam-webster dictionary, “cab” means
1: a light closed carriage pulled by a horse
2: a vehicle that carries paying passengers : TAXICAB
3: the covered compartment for the engineer and the controls of a locomotive or for the operator of a truck, tractor, or crane
As per Cambridge dictionary, https://dictionary.cambridge.org/dictionary/english/cab, a taxi (= car with a driver whom you pay to take you where you want to go) the separate part at the front of some vehicles in which the driver sits:
From all the above definitions, it emerges that in common parlance, cab refers to a vehicle which has been taken on hire/rent, along with driver, for going from one place to another.
12. When it comes to Goods and Services Tax, tax on services finds its genesis from Chapter V of the Finance Act, 1994, i.e., the Service Tax statute. Therefore, the definitions relating to “rent-a-cab” as occurring in the Finance Act, 1994, shall also have bearing on what is meant by Urent-a-cab” in common com
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designed to carry passengers, irrespective of their capacity to carry passengers. The contentions of the applicant that hiring of buses which can carry large number of passengers would not qualify under “rent-a-cab” is found to be untenable and the activitiy of the contractor in the instant case, providing buses or cars on hire to the applicant, is specifically covered under the meaning of “rent-a-cab”, which makes the impugned supply as ineligible for ITC in terms of Section 17(5) of the CGST/HGST Act, 2017.
14. In the Case of Commissioner of Service Tax Vs. Vijay Travels [2014 (36) S.T.R. 513 (Guj.)] = 2015 (1) TMI 809 – GUJARAT HIGH COURT, the Hon'ble High Court of Gujarat, observed as under:
Words and Phrases – Rent – It means the act of payment for the use of something Renting means a usually fixed periodical return, especially, an agreed sum paid at fixed intervals by a person for any use of the property or car – It is also the amount paid by a hirer to the owner for the use of
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t a service which is obligatory for an employer to provide to its employees under any law for the time being in force; or that such inward supply of services is being is used by the applicant for making an outward taxable supply of the same category of services or as part of a taxable composite or mixed supply.
Accordingly, the applicant is not eligible for input tax credit of GST charged by the Contractor for hiring of buses/cars for transportation of employees.
ADVANCE RULING UNDER SECTION 98 OF THE CGST/HGST ACT, 2017
16.1. The applicant is not eligible to take input tax credit on:
a. GST charged by the Contractor for hiring of buses for transportation of employees.
b. GST charged by the Contractor for hiring of cars for transportation of employees?
16.2. The restriction on 'Rent a Cab' service specified in Section 17(5)(b)(iii) is applicable to input tax credit on:-
a. GST charged by the Contractor for hiring of buses for transportation of employees.
b. GST charged by the
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