QUESTION

An LLP is in the business of providing Passenger Transport Services to many corporate and non-corporate entities. Since begining & upto July 2019 it was charging a concessional rate of 5% from its customers on all supplies. From August 2019 it started charging 12% GST on all supplies. Now the question is:- 1. Upto July 2019 - Whether the LLP would be entitled to take credit of input supplies on GST charged by other cab operators being in the same line of business even if it was charging concessional rate of 5%. Since August 2019 it started charging 12% - whether it would be eligible to take credit of input GST on all kind of supplies including the supplies which are not from the persons in same line of business. Kindly quote the relevant notification and circulars in support of your view. Thanks !

ANSWER

 Facts of the case:

Eligibility of ITC in case of Passenger Transport Services.

 Law Applicable:

Notification No. 11/2017-Central Tax (Rate)

(vi) Transport of passengers by any motor vehicle designed to carry passengers where the cost of fuel is included in the consideration charged from the service recipient.






 

2.5









 

Provided that credit of input tax charged on goods and services used in supplying the service, other than the input tax credit of input service in the same line of business (i.e. service procured from another service provider of transporting passengers in a motor vehicle or renting of a motor vehicle), has not been taken.
[Please refer to Explanation no. (iv)]


 

or

6
 

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Interpretation: As per  Notification No. 11/2017-Central Tax (Rate) in case of  Transport of passengers by any motor vehicle designed to carry passengers where the cost of fuel is included in the consideration charged from the service recipient there may be two situations regarding eligibility of ITC:

1. If you are charging concessional rate of 5%, then you can take input of only input service in the same line of business.
2. However if you are charging 12%, then there is no restriction on availing of ITC i.e. you are eligible for all ITC on goods and services used in supplying the service.

 Conclusion: In your case upto July 2019 you are eligible to take credit of only input services on GST charged by other cab operators being in the same line of business.
Thereafter you can take credit on all input services and inputs only wef from date you started charging GST @12% i.e. from August 2019 onwards.(Reply dt.06-07-2020)