EXAMPLE-132

 Mr. Manoj takes the service of rent-a-cab. He claimed credit on  tax paid on taking a cab on  rent . He used the cab for own and  his family trips to hill station for 1 month. Determine

(i)                  How will this transaction be treated under GST.

(ii)               Whether the same treatment will be applied in GST if Mr Manoj chose not to claim ITC on cab used for private purpose.

Answer

(i) Schedule I specifies that activities to be treated as supply even made without consideration, Para 2 of the said Schedule says that where supply of goods or services or both take place between related person or between distinct person as specified in section 25, when made in the course of furtherance of business, the same would amount to supply of service.

Schedule II Para 4(b) specifies that where, by or under the direction of a person carrying on a business, goods held or used for the purposes of the business are put to any private use or are used, or made available to any person for use, for any purpose other than a purpose of the business, whether or not for a consideration, the usage or making available of such goods is a supply of services;

Thus, (i) GST is payable when supply is made for the use of private purpose.

(ii) No. If the company chooses not to claim input tax paid on taking a cab on rent for private use, then the company is not required to reverse any input tax credit. Because schedule I specifies that activity is treated as supply where ITC is availed on such assets.