Input tax credit— Section 16, 17 of CGST Act— In the instant case, the applicant submits that their factory operates 24 hours a day, on four shifts.

Furthermore, the factory and mines are located in remote area where public conveyances are not available at all time. Since some of the factory shifts are in odd hours and since the factory is not easily accessible, the applicant has to provide transportation facilities to its employees in non-air-conditioned bus having approved seating capacity of more than 13 passengers for commuting to and from workplace.

The service providers collect 5% GST on the vehicle hiring charges. In order to ensure that the transportation facility is used by only authorized persons/employees, the applicant issues pass to employees and a nominal recovery is made from them every month. The difference between the hire/rental charges paid to service providers and the nominal recovery made from the employees is part of the cost to the applicant.

The applicant has requested an advance ruling on the following

1. Whether input tax credit is admissible on GST charged by service provider on hiring of bus/motor vehicle having approved seating capacity of more than 13 persons for transportation of employees to and from the workplace?

2. If input tax credit is available, whether it would be restricted to the extent of cost borne by the applicant?

In the instant case, the applicant has engaged the service provider to provide transportation facilities to the employees in non-air-conditioned buses for commuting to and from the workplace and it is stated that the service provider is using motor vehicles having an approved seating capacity of more than thirteen persons (including the driver) for the same. Further, it is stated that applicant issues pass only to their employees, so that the transportation facility can be used by such employees alone and that a nominal amount is recovered on monthly basis from the employees to whom such pass is issued. Based on the discussion above, we conclude that the applicant is eligible for availing input tax credit of the tax paid for hiring of bus/motor vehicle having approved seating capacity of more than 13 persons for transportation of their employees to and from the workplace.

Held that— The applicant is eligible to avail the input tax credit of GST charged by the service provider subject to fulfilment of conditions prescribed in Section 16 of the CGST Act, 2017.

The applicant is eligible to avail input tax credit only to the extent of the cost of transportation borne by the applicant