Page 202 - GSTL_23rd July 2020_Vol 38_Part 4

568 GST LAW TIMES [ Vol. 38
While purchasing Cash Carry Vans during pre-GST era, the appellant has paid
the Central Excise Duty as well as Value added Tax.
3. When these vans cannot be used further, the appellant sells these
motor vehicles as scrap. In certain cases, instead of purchasing motor vehicles,
the appellant prefers to hire these motor vehicles.
4. The Appellant had approached the Advance Ruling Authority
(AAR) for seeking an advance ruling under Section 97(1) of the CGST Act, in re-
spect of the following questions :
(I) 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 yes, please provide
the rate of GST and/or Compensation Cess.
(II) If answer to Question I is in affirmative, whether Input Tax Credit is
available to CMS Info Systems Limited on purchase of motor vehi-
cles i.e. cash carry vans which are purchased, used for cash man-
agement business and supplied post usage as scrap.
Order passed by authority for Advance Ruling
5. Regarding the issue raised in the Question I of the application, it is
held that supply of motor vehicles i.e. cash carry vans as scrap after its usage will
be treated as supply in the course or furtherance of business in terms of the pro-
vision of Section 7 of the CGST Act, 2017 and such transaction would attract GST
as the disposal of cash carrying van is a transaction in connection with or inci-
dental to or ancillary to business in so much as the sale proceeds of such vans is
treated as income and reflected in P&L Account, thereby marking such transac-
tion as taxable supply attracting GST thereon. As regards, the rate of GST levia-
ble on such supply, the applicant has not provided any invoice or has informed
tariff heading of these goods. Further, it is also not clear whether after sale these
would be usable as vehicles or would be fully scrapped. As the said goods do not
appear in the Notification No. 2/2017-C.T. (Rate) which exempts the goods from
the levy of GST, these taxable supplies would be taxed at rates mentioned in the
Notification No. 1/2017-C.T. (Rate), which may be referred by the applicant ac-
cordingly.
6. Regarding the issue raised in the Question II of the application,
wherein it was asked that if the sale of the cash carry van, as scrap after its usage,
held a taxable supply, whether Input Tax Credit is available to CMS Info Systems
Limited on purchase of such motor vehicles i.e. cash carry vans which are used
for cash management business and supplied, post usage, as scrap, there was dif-
ference in opinion on this particular issue between two members of the Advance
Ruling Authority. Therefore, the matter was referred to the Appellate Authority
for Advance Ruling for giving the appropriate ruling in this regard.
Grounds of appeal
7. The Appellant submitted that they were lawfully eligible and enti-
tled for input tax credit of the GST paid on standard motor vehicle and also GST
paid on the fabrication of the vehicles to suit the need for cash carrying vehicle.
8. According to Section 17(5)(a) of CGST Act, 2017, input tax credit on
motor vehicles and other conveyance is not available; however, the exception has
been carved out inter alia to the motor vehicles and other conveyances used for
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