ITC can be claimed on leased goods transport vehicle : lshan Resins & Paints Limited

Case covered:

Name of the applicant: lshan Resins & Paints Limited
Address (correspondence) Gate No 1, Jalan Industrial Complex, Baniara, Begri, Howrah-711411
GSTIN 1gAAACI5587K1ZO
Case Number 46 of 2019
ARN AD 1911 190001310
Date of application November 08, 2019
Order number and date 40 of WBAAR/20 19-20 dated 17 101 12020
Applicant’s representative heard Sri Narayan Kumar Agarwal, FCA

Ms. Nikita Sultania, CA

Download the copy of the order:

Related Topic:
GST ON RENT A CAB

Facts of the case:

2.1 the applicant provides a proforma agreement. According to the agreement the Applicant will lease out the vehicle tailing the transfer of the right to use. The lessee will enjoy possession of the vehicle and provide the operator, bear the cost of fuel, maintenance, insurance, etc.
2.2 Sl No. 22 of the Exemption Notification exempts the service by way of giving on hire a means of transportation of goods to a goods transport agency. The Applicant, however, argues that leasing out a vehicle without operator where the control and possession are transferred to the lessee is different from giving the vehicle on hire. ln support of its argument the Applicant refers to the judgment of Uttarakhand High Court in Commissioner of Customs & Central Excise vs Sachin Malhotra [2015 (37) STR 684 (Uttarakhand)].
2.3 ln Sachin Malhotra (supra) the court has examined whether there is any distinction between a simple contract of hiring and renting of a cab. The court has held that although both rent and hire may, in a different context, have the same connotation, they signify two different classes of transactions in the context of imposing service tax under section 65(105)(o) of the Finance Act, 1994, as amended. ln renting of a cab scheme, as defined under section 75 of the Motor Vehicles Act, 1988, the possession and control of the vehicle is transferred to the hirer. Therefore, unless such transfer of the right to use happens a contract of hiring a vehicle does not qualify as renting a cab under the rent-a-cab scheme.
2.4 Applying this analogy the Applicant argues that hiring in Sl No. 22 of the Exemption Notification does not include renting or leasing of vehicles when possession and control of the vehicle are passed on to the hirer. As the Applicant intends to transfer the possession and control to the lessee, Sl No. 22 of the Exemption Notification will not, therefore, apply to its transactions.
2.5 Rental service of transport vehicles with an operator is taxable under Sl No. 10 of Notification No. 1112017 – CT (Rate) dated 2810612017 (corresponding State No. 1135-FT dated 2810612017), as amended (hereinafter collectively called the Rate Notification). But it does not apply to the Applicant’s case, as the Applicantintends to lease out the vehicles without an operator.
2.6 The Applicant submits that its service of leasing the vehicles without an operator can be taxed under the appropriate heading under Sl No. 17 of the Rate Notification.