Recently, the Hon’ble HC of Bombay has admitted the writ petition challenging the order dated August 6, 2018 passed by Appellate Authority for Advance Ruling (“AAAR”), Maharashtra ruling that the input tax credit (“ITC”) is not available on purchase of motor vehicle/vans to carry cash. HC set aside the AAAR order and directed to consider the submissions made by the petitioner and give its conclusion thereon duly supported by the reasons.
M/s. CMS Info Systems Limited (“the Petitioner”) is having cash management network pan India. During the course of providing the cash management services, the Petitioner is, inter alia, engaged in managing cash circulation through transporting cash from currency chest to bank branches through the security vans popularly known as “cash carry vans”.
The Hon’ble AAAR, Maharashtra vide order dated August 6, 2018, observed that ITC is not available on purchase of motor vehicles i.e. cash carry vans, which are purchased and used for cash management business and supplied post usage as scrap. It was observed that since the cash carry vehicles are deployed to carry cash and bullion for other than for numismatic purposes, the cash carried by them is to be construed as money and not goods.
Being aggrieved, the Petitioner challenged the order of AAAR, claiming that there was a flaw in the decision making the process as the order failed to deal with the principal submissions of the assessee (after recording the same in the impugned order) viz. ITC would be available in respect of motor vehicles used for transport of money, in view of the definition of ‘goods’ and ‘money’ in the GST law.
Whether ITC is available on purchase of motor vehicles i.e. cash carry vans which are purchased, used for cash management business and supplied post usage as scrap?
The Hon’ble High Court of Bombay in Writ Petition No. 5801 of 2019 dated July 9, 2019, noted Petitioner’s submission that the ‘goods’ would include ‘money’ as the cash being transported by them in motor vehicles was not used as a legal tender. Therefore, it was to be treated as ‘goods’ and Section 17(5) of the CGST Act, 2017 at the relevant time had excluded the benefit of ITC in respect of motor vehicles, unless used for transport of ‘goods’.
Accordingly, the HC observed as under:
- The aforesaid principal submission though recorded, has not been dealt with at all in the impugned order. This there is a flaw in the decision making process of AAAR.
- Reliance placed in the impugned order upon the press note issued subsequent to a GST Council recommending to allow ITC in respect of the motor vehicles used for transportation of money, would not by itself lead to the conclusion that prior thereto, money was not included within the definition of ‘goods’. This has to examined in terms of the definition of ‘goods’ and ‘money’ found in the CGST Act.
- The entire issue before the AAR that whether the vans/motor vehicles in which the Petitioners were transporting cash, would be money for the purpose of Section 2(52) of the CGST Act, has not been dealt with in the impugned order.
- It is necessary for the Authority to consider the submissions made by the parties before it and give its findings in the context of the submissions made. Ignoring a submission would render the order vulnerable to judicial review by this Court.
Hence, the Hon’ble HC set aside the impugned order and directed the AAAR to consider the submissions made by the Petitioner and give its conclusion thereon duly supported by the reasons.
Note: For easy reference, the definition of ‘goods’ and ‘money’ under Section 2(52) and Section 2(75) of the CGST Act respectively, are reproduced as under:
Section 2(52): “goods” means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply.
Section 2(75): “money” means the Indian legal tender or any foreign currency, cheque, promissory note, bill of exchange, letter of credit, draft, pay order, traveller cheque, money order, postal or electronic remittance or any other instrument recognised by the Reserve Bank of India when used as a consideration to settle an obligation or exchange with Indian legal tender of another denomination but shall not include any currency that is held for its numismatic value.