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AAR of West Bengal ITC not available on purchase of Ambulance for period prior to Section 17(5) amendment

Fact: M/s. Nipha Exports Pvt. Ltd. (“the applicant”) has factories in Howrah and Hooghly, which are engaged in manufacturing agricultural machinery. The applicant has purchased an ambulance for the benefit of the employees, as required under Section 45(4) of the Factories Act, 1948. Issue Involved: Whether the input tax credit is admissible on ambulances purchased for the benefit of the employees under legal requirement of the Factories Act, 1948?
Applicant’sInterpretation of law: The Applicant contended that the input tax paid on inward supply of the ambulance is eligible for credit under the Second Proviso to Section 17(5)(b) of the GST Act, 2017 as amended w.e.f. February 01, 2019.
Held: The Hon’ble AAR of West Bengal vide its Advance Ruling Order No. 43/WBAAR/2018-19 dated February 26, 2019 stated that the eligibility for claiming input tax credit under Section 16(1) is subject to the provisions of law at the time of occurrence of the taxable event, irrespective of when the claim is made. Second proviso to section 17(5)(b) of the GST Act, 2017, as it stands post amendment effective from February 01, 2019, is not applicable to a transaction made in November 2018. As it stood that prior to amendment that the exception carved out under Section 17(5)(b)(iii)(A) of the GST Act for services which are obligatory for an employer to provide to its employees under any law for the time being in force is limited only to rent-a-cab, life insurance and health insurance. Therefore, Input tax credit is not admissible on the ambulance purchased in November 2018, as Section 17(5) of the GST Act, 2017, as it stood in the relevant period, blocks any such enjoyment, even if provisioning of ambulance service to the employees is obligatory under the Factories Act, 1948.


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