2019(08)LCX0124(AAR)
AAR-GUJARAT
M/s Kandla Port Trust
decided on 22/08/2019
OFFICE OF THE GUJARAT AUTHORITY
FOR ADVANCE RULING
COMMISSIONERATE OF GOODS AND SERVICES TAX
GUJARAT STATE
D/5, RAJYA KAR BHAVAN, ASHRAM ROAD,
AHMEDABAD 380 009
ADVANCE RULING NO. GUJ/GAAR/R/13/2019
(IN APPLICATION NO. Advance Ruling/SGST&CGST/2018/AR/24)
Date:22.08.2019
| Name and address of the applicant |
M/s. Kandla Port Trust (Deendayal Port Trust), CDC Section, Sewa Sadan-III, Kandla, Kachch. |
|
| GSTIN of the applicant | 24AAALK0046N1Z6 | |
| Date of application | 23/03/2018 | |
| Clause(s) of Section 97(2) of CGST / GGST Act, 2017, under which the question(s) raised. |
(iv) admissibility of input tax credit of tax paid or deemed to have been paid. |
|
| Date of Personal Hearing | 12.07.2018 | |
| Present for the applicant | Shri Hardik V Thacker, C.A. |
2. M/s. Kandla Port Trust (Deendayal
Port Trust), CDC Section, Sewa Sadan- III, Kandla, Kachchh (hereinafter referred
to as the Applicant¯ for the sake of brevity), is engaged in port service to
various clients. The applicant has residential colony for employees of the port.
Quarters have been given to their employees on nominal fees and various other
common facility centers like Hospital, Sports Complex, Garden, Guest House for
official visitors and School for employees children, are available within the
colony. Further, the applicant is purchasing medicines for employees as
prescribed by their doctors from outside on contractual basis. They also
purchase movable medical equipment at hospital. They are also paying for AMC for
repair and maintenance of residential colony, hospitals and school (other than
new constructions). They are also providing telephone & mobile facility at
residence of officers and at hospitals. They are also paying for caretaking
/housekeeping services at Guest House.
3. The Applicant, vide Annexure-I of their application dated 23.03.2018, has
sought for advance ruling for eligibility of Input Tax Credit (ITC) with respect
of below mentioned specific expenses occurred by the applicant:-
a. Purchase of medicines for employees as prescribed by their doctor from
outside on contractual basis.
b. Purchase of movable medical equipment at hospital.
c. AMC for repair and maintenance of residential colony and hospitals and school
(other than new constructions, ITC for which is blocked u/s 15 of CGST Act,
2017).
d. Telephones & Mobiles at residence of officers and at hospitals.
e. Caretaking /housekeeping services at Guest House.
3.1 The Applicant further submitted that all the above expenses are incurred for
maintaining its employees. The employees are backbone for any organization for
providing output services to customers/clients.
3.2 The Applicant, vide their letter dated 24.07.2018, submitted their
additional submission wherein they, besides above facts, submitted that all the
above expenses are incurred by Deendayal Port Trust for maintaining its
employees. The employees are backbone for any organization for providing output
services to customers/clients. It is not possible for any organization to do
business activities without employees. Accordingly, expenses are incurred in the
course and furtherance of business. Further, as directed during the personal
hearing held on 12.07.2018, they have submitted the copy of the Chapter V of
Major Port Trust Act, 1963 (Object clause). They further submitted that as the Deendayal Port Trust¯ is carrying out its activities as per the provisions of
the Major Port Trust Act, 1963 and as per the directions of ministry of
shipping, there is no any Memorandum and Article of Association like in case of
other organizations.
4. The Jurisdictional Additional Commissioner, Central Goods and Services Tax,
Kutch (Gandhidham), vide their letter dated 12.04.2018 submitted that the
activity/services in respect of which an advance ruling has been sought is an
ongoing activity and as per record available and facts in notice, there are no
such cases pending/decided in GST regime. Further, he has submitted that Section
16 of the CGST Act, 2017 which relates to eligibility and conditions for taking
input tax credit. Sub section (1) of Section 16 of CGST Act, 2017 provide that Every registered person shall, subject to such conditions and restrictions as
may be prescribed and in the manner specified in section 49, be entitled to take
credit of input tax charged on any supply of goods or services or both to him
which are used or intended to be used in the course or furtherance of his
business and the said amount shall be credited to the electronic credit ledger
of such person.¯
4.1 The Jurisdictional Additional Commissioner further submitted that Section 17
of the CGST Act, 2017 which relates to Apportionment of Credit and blocked
credits and sub section (1) of Section 17 of the CGST Act, 2017 provide that Where the goods or services or both are used by the registered person partly
for the purpose of any business and partly for other purposes, the amount of
credit shall be restricted to so much of the input tax as is attributable to the
purposes of his business¯.
4.2 As per clear reading of Sub Section (1) of Section 16 and sub section (1) of
Section 17 of the CGST Act, 2017, it is clear that a registered person is
entitled to take credit of input tax charged on supply of goods or services or
both to him which are used or intended to be used in the course or furtherance
of his business only.
4.3 In that case, the applicant is incurring expenses for providing common
facilities to their employees within the residential colony where the quarter
has been given on nominal fees i.e. Hospitals, Sports Complex, garden, Guest
House for official visitors and school for employees children and the same is
not related to furtherance of their business/output service i.e. port service.
4.4 In view of the above, the Jurisdictional Commissionerate has opinioned that
as per Sub Section (1) of Section 17 of the CGST Act, 2017, the applicant is not
entitled to take credit of input tax charged in respect of above mentioned
expenses as the same is not used in furtherance of their business.
5. We also find that the applicant is engaged in supply of port services to
various clients. Said expenses are for providing common facilities to their
employees within the residential colony and the same are not relates to
furtherance of their business/output service i.e. Port Service¯. It is very
clear from the provisions of Sub Section (1) of Section 16 and Sub section (1)
of Section 17 of the CGST Act, 2017, that a registered person is entitled to
take credit of input tax charged on supply of goods or services or both to him
which are used or intended to be used in the course or furtherance of his
business only. In view of the above, the applicant is not entitled to take
credit of input tax charged in respect of above mentioned expenses as the same
is not used in furtherance of their business.
6. In view of the foregoing, we rule as under
R U L I N G
Question 1: Whether Input Tax
Credit¯ with respect to specific expenses as mentioned in point 3 incurred by
Deendayal Port Trust for maintaining its employees is available or not?
Answer 1: The applicant is not entitled to take credit of input tax charged in
respect of above mentioned expenses, as the same is not used in the course or
furtherance of his business.
(R.B. Mankodi)
Member
(G.C. Jain)
Member
Place: Ahmedabad
Date: 22.08.2019
Equivalent .