The Bombay High Court has set aside an order passed by the Maharashtra Appellate Authority for Advance Ruling (AAAR) for Goods and Services Tax (GST) on admissibility of input tax credit (ITC) on purchase of motor vehicles to carry cash.
The petitioner wanted to know if ‘money’ will be considered as ‘goods’ under GST law? The court felt that this aspect has not been dealt with by the AAAR. “We note that the decision making process has not been complied with by the Authority (AAAR). 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. Ignoring a submission would render vulnerable to judicial review by this court,” a Division Bench said.
Setting aside the order, the Bench asked the AAAR for fresh disposal on admissibility of ITC. “Needless to state that the AAAR would consider the submissions made by the appellant and give its conclusion thereon duly supported by the reasons,” the Bench said.
“This is one of the rare rulings under GST, wherein the High Court has set aside the order of the AAAR on the ground that due consideration was not given to the submissions made by the petitioner, ” said Harpreet Singh, Partner in KPMG.
The petitioner, CMS Info System, is a cash handling firm. Its website says that CMS network spans over 105,000 ATMs, retail pick-up points and managed services points, making it India’s largest cash management company and the world’s fifth largest ATM cash management company.
The company purchases motor vehicles for transporting cash. It had first approached the Authority for Advanced Rulings (AAR) seeking answers to — 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, then what would be rate of GST and/or Compensation Cess? and if answer to the first question is in the affirmative then whether ITC is available to the company on purchase of motor vehicles.
Scrap treated as supply
The AAR held that supply of cash carry vans as scrap after its usage will be treated as ‘supply’ in the course or furtherance of business and such transaction would attract GST. However, there was no ruling for the second question as the two members of AAR failed to reach a consensus. The matter then reached the AAAR which said, “If ‘money’ is not covered as ‘goods’ in the definition of ‘goods’ under CGST Act, then it is not ‘goods’ for everyone and it cannot be said that it is not ‘goods’ for general perception and it is ‘goods’ for the appellant (CMS).” Accordingly, it decided against giving ITC on purchase of motor vehicles and supplied, post usage, as scrap.
Aggrieved by the order of the AAAR, the petitioner challenged the said order in the High Court saying that 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. It submitted that the goods would include money as the cash being transported by them in motor vehicles is not as a legal lender but as goods. The respondent, on the other hand, submitted that the AAAR has taken due care of the submissions made by the petitioner and hence there is no flaw in the decision making process.
Source- Business Line.