Input Tax Credit is not available on purchase of ‘Cash Carry Vans’ later on sold as scrap: AAAR
Facts: M/s CMS Info Systems Limited is having cash management network pan India. During the course of providing the cash management services, the appellant is, inter alia, engaged in managing cash circulation through transporting cash from currency chest to bank branches through the security vans popularly known as “cash carry vans”.
Issues Involved:
- Whether supply of such motor vehicles as scrap after its usage can be treated as supply in the course or furtherance of business and whether such transaction would attract GST?
- If answer to Question (I) is in affirmative, whether Input Tax Credit (“ITC”) is available on purchase of motor vehicles i.e. cash carry vans which are purchased, used for cash management business and supplied post usage as scrap.
The Hon’ble AAR, Maharashtra held that supply of cash carry vans as scrap after its usage will be treated as supply in the course or furtherance of business in terms of the provision of Section 7 of the CGST Act, 2017 and such transaction would attract GST. Regarding the issue of ITC, there was difference in opinion and the matter has been referred to the Appellate Authority for Advance Ruling for giving the appropriate ruling in this regard.
Held: The Hon’ble AAAR, Maharashtra vide Order No. MAH/AAAR/SS-RJ/04/2018-19 dated August 6, 2018, observed that ITC is not available on purchase of motor vehicles i.e. cash carry vans, which are purchased and used for cash management business and supplied post usage as scrap. It was observed that since the cash carry vehicles are deployed to carry cash and bullion for other than for numismatic purposes, the cash carried by them is to be construed as money and not goods.
Our Comments: The GST Council proposed to allow ITC in respect of motor vehicles if they are used for transportation of money for or by a banking company or a financial institution in the draft of proposed changes in GST law unveiled on July 9, 2018. However, the same does not find place in the Amendment Bills as place and passed by the Lok Sabha on August 9, 2018. Further, as per the proposed amendments, ITC on motor vehicles is restricted to only those meant for transportation of persons having approved capacity of not more than 13 persons (including the driver) except when used for specified purposes. Further, the words ‘other conveyances’ have been removed widening the scope of availability of ITC.
Citation: [2018] 96 taxmann.com 292 (AAAR-MAHARASHTRA)