Dear Sir, A Hotel/Resort has bought a Car and it will be used for “Taxi Purposes”. The customers who visit Hotel/Resort, can use such Car as Taxi on Paid basis, if they need. Query-
- As per Sec 17(5),ITC for Motor Vehicle purchased and used for the purpose ofTransportation of Passengers is allowed. Can i claim ITC of Car purchased because it will be used for Transportation of Passengers ?? OR ELSE
- As per Sec 17(5), ITC is Blocked, of Motor vehicle is having Seating upto 13 (including driver). And as the said car is having seating capacaity less than 13. So, ITC will be denied ?? Pls share your views as to whether prudently ITC should be claimed or not ?? ALSO TELL WHETHER ITC OF REPAIRS, INSURANCE ETC CAN BE CLAIMED ??
- One general doubt is that provision of ITC on motor vehicle having seating capacity upto 13 , is not mentioned in Sec 17(5) of the CGST Act which has been uploaded in the CBIC website ? Whether such provision still exists or not ?? Thanks sir…
In Mohana Ghosh [2019] 106 taxmann.com 108 (AAR-WEST BENGAL) the transportation of passengers and renting of motor vehicle has been distinguished as under:
- Passenger Transportation Service: Passenger transportation service is classified under SAC 9964. The recipient of the service is a passenger travelling from one place to another. He may have varying degrees of control over the carriage, providing him with a certain measure of independence in choosing the destination and travel time, depending upon the nature of the contract, explicit or implied. But the supply remains that of transportation of the recipient as a passenger, and the consideration is paid for the distance traveled.
- Renting of Motor Vehicle: Renting of any motor vehicle is classified under SAC 9966. The recipient of this service is not a passenger. He is enjoying the service of having provided a motor vehicle, with or without a driver, for use in whatever way he likes for the duration of the renting period. It may remain parked for the entire duration of renting without actual transportation of any person. Even when any person – the recipient of the service or someone of his choice – is being actually transported, the consideration is paid not for the distance traveled, but for renting the cab.
In light of above, it service provided is transportation of passengers the credit blocking u/s 17(5) will not apply and ITC can be availed.
In above situation the ITC of R&M, Insurance etc can also be availed.
Seating capacity provision was incorporated in Sec 17(5) vide substitution made by CGST (Amendment) Act, 2018 w.e.f. 1-2-2019. Actually in CBIC website complete updated Act is not available rather scattered Acts are available.
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