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Bombay HC Sets Aside AARA Order Denying Input Tax Credit On ‘Cash Carry’ Vehicles

Background of the case:

The petitioner, CMS Info System, is a cash handling firm. It is a India’s largest cash management company and the world’s fifth largest ATM cash management company.

The company purchases motor vehicles for transporting cash and desirous to know about the applicability of GST and the claim of ITC on the same. Hence approached to AAR.

Issue involved

The petitioner had sought an advance ruling from the Advance Ruling Authority (ARA) ruling on the following two questions of law:

  1. Whether supply of such motor vehicles as scrap after its usage can be treated as supply in the course of furtherance of business and whether such transaction would attract GST? If yes, please provide the rate of GST and / or Compensation Cess.
  2. If answer to question (i) is in affirmative, whether Input Tax Credit is available to CMS Info Systems Ltd. on purchase of motor vehicles i.e. cash carry vans which are purchased, used for cash management business and supplied post usage as scrap.

Judgment by AAR

For the first question raised by the applicant, AAR clarifies that Goods and Service tax shall be leviable on motor vehicles sold after usage as scrap as such transaction shall be treated as “Supply” .

However, for the second question raised, there was a difference of opinion between the members of ARA.

Hence, a reference was made to AARA under Section 98(5) of the CGST Act.

Judgment by AAAR

In reference to the second question raised, AARA held that the input tax credit would not be available on purchase of cash carry vans.

The decision was given on the ground that money is excluded from the definition of goods as provided under the GST Act, 2017.

Hence, as per Section 17(5) of the GST Act, ITC on cash carry vans shall be eligible to input tax credit.

Petition against the judgment of AAR

Grounds of petition

The Petitioner was aggrieved by the order of the AAAR, challenging the said order in the High Court as

“There has been a flaw in the decision making process by the AAAR as it had not dealt with the principal submissions of the petitioners”

The petitioner wanted to know if ‘money’ will be considered as ‘goods’ under GST law?

The court observed that this aspect has not been dealt with by the AAAR and It is necessary for the Authority to consider the submissions made by the parties and give its findings in the context of the submissions made.

Because of ignorance of submission submitted by applicant, Court has set aside the order of AAAR and asked the AAAR for fresh disposal on admissibility of ITC. 


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