The Applicant sought the Advance Ruling in light of the mandates by the Tamil Nadu Shops and Establishments Act, 1947

The Tamilnadu Authority for Advance Ruling (AAR) ruled that Input Tax Credit shall be available on the services of Leasing/Renting/Hiring of Motor Vehicles, when engaged by a Company specifically for the transportation of women employees working a night-shift between 8:00 P.M. and 6:00 A.M at the company’s work premises. The Application for Advance Ruling was applied for by CMA CGM Global Business Services (India) Private Limited (CMA CGM), a private limited company involved in the Information Technology Enabled Services Sector, providing back-office support services to its parent company CMA CGM SA, headquartered in Marseille, France among other affiliates. AAR was faced with ascertaining whether the Applicant can claim input tax credit (ITC) on the tax paid for the Leasing/Renting/Hiring of Motor Vehicles to provide transportation to women employees as per the mandates of the Shops and Establishments Act, 1947 and; whether the Applicant can retrospectively avail such ITC not claimed before out of abundant caution and lack of clarity on the law. Get a Copy of Supreme Court Judgements on GST, Click here The Applicant, on the basis of its registration under the provisions of the Tamil Nadu Shops and Establishments Act, 1947 and the allied Rules referred to Notification (G.O. Ms. No. 61, Labour Welfare and Skill Development Department (K2)) which mandates that an Employer such as the Applicant shall provide transportation facility for women employees working in shifts in order to ensure their safety during the commute to and from the workplace. CMA CGM further relied on their internal policy mandating that women employees who may leave the work premises after 8 P.M. or work in the facility between 9 P.M. and 6 A.M. are to only use the cab facility provided by the Company for their transportation; along with other practices to ensure the safe commute of their Women Employees. The Applicant pays tax on the transport services engaged by them either through reverse charge mechanism or on the payment of consideration to the supplier, where the supplier raises invoice on forward charge basis. With regards to the GST paid on the availing of transport services, the Applicant started availing Input Tax Credit (ITC) following the Amendment to Section 17(5)(b) of the Central Goods and Services Tax Act, 2017 (CGST Act). Get a Copy of Supreme Court Judgements on GST, Click here Considering the submissions made by the Applicant, the two-member bench of AAR, Tamil Nadu composed by D. Jayapriya, I.R.S, Member (CGST) and A. Valli, M.Sc, Member (SGST) observed that the provisions of Section 17(5) of the CGST Act does not prima facie permit the availing Input Tax Credit on the Leasing/Renting/Hiring of Motor Vehicles as the same falls under the category of blocked credit. However, proviso to Section 17 provides that Input Tax Credit may be availed on the Leasing/Renting/Hiring of Motor Vehicles where it is obligatory to provide such service under any statutory law. In light of CBIC Circular No.172/04/2022 dated 06.07.2022 and G.O. Ms No. 61, Labour Welfare and Skill Development (K2) dated 02.06.2022, AAR ruled that the Applicant is eligible to avail ITC on the leasing,renting and hiring of motor vehicles for providing transport to women employees alone who are arriving or leaving the workplace between 8:00 P.M. to 6:00 A.M. as the same has been made statutorily obligatory by the Tamil Nadu Government. The AAR also permitted the Applicant’s intent to retrospectively avail ITC not availed before, specifically from 28.05.2019, being the date of Notification issued by the Tamil Nadu State Government.