No ITC Allowed on Purchase of Car if Assessee Opted to Pay 5% GST for Providing Passenger Transport Services by Road | AAR

Case Details: Authority for Advance Rulings, Telangana Noori Travels, In re - [2024] 162 taxmann.com 365 (AAR-TELANGANA)

Judiciary and Counsel Details

• • S.V. Kasi Visweswara Rao & Sahil Inamdar, Member

Facts of the Case

The applicant is engaged in providing services of transport of passengers by motor vehicles. It opted to pay tax at a lower rate by not availing input tax credit on goods and services used in his supplies. Thereafter, it purchased a new car and filed an application for advance ruling to determine whether ITC is eligible on such purchase of car.

AAR Held

The Authority for Advance Ruling (AAR) noted that the supplier of applicant reported the purchase of the car in its GSTR-1 in July 2023, and the applicant received the invoice in its GSTR-2B for the month of July 2023. During this period, the applicant opted for payment of GST at 5% on the output services. It clearly showed that the applicant by opting to pay tax at a lower rate had forfeited his right to avail input tax credit on the goods and services procured during that period.

The AAR further noted that original invoice was issued in August 2023 but statutory returns filed on common portal would stand on a higher pedestal as evidence, as compared to physical invoice adduced by the applicant. Thus, it was held that the ITC pertaining to purchase of car would not be available to the applicant.