Case Details : GST- ITC on Transport charges for employee's pick and drop service
Case Related To : MALABAR CEMENTS LIMITED
Declared By : Kerala - Advance Ruling on 18th February 2022
What Happened Exactly :
- The applicant is a Government of Kerala owned Public Sector Company engaged in the manufacturing of cement.
- Their factory operates 24 hours a day, on four shifts and located in remote area.
- Due to above reasons, the applicant has to provide transportation facilities to its employees in non-air-conditioned bus having approved seating capacity of more than 13 passengers for commuting to and from workplace.
- The service providers collect 5% GST on the vehicle hiring charges.
- The difference between the rental charges paid to service providers and the nominal recovery made from the employees is part of the cost to the applicant.
- Applicant seeks advance ruling as to whether input tax credit is admissible on GST charged by service provider on hire charges.
Court's Decision :
- There is no restriction in availing input tax credit of the tax paid on motor vehicles or hiring or renting of motor vehicles having approved seating capacity of more than thirteen persons.
- The applicant is eligible for availing input tax credit of the tax paid for hiring of bus/motor vehicle having approved seating capacity of more than 13 persons for transportation of their employees to and from the workplace.
- The eligibility of the applicant to avail input tax credit will be restricted to the extent of the cost of transportation borne by the applicant.