Bombay HC Sets Aside AARA Order Denying Input Tax Credit On 'Cash Carry' Vehicles [Read Order]

Bombay HC Sets Aside AARA Order Denying Input Tax Credit On

The Bombay High Court recently set aside an order of the Maharashtra Appellate Advance Ruling Authority (AARA) under Section 101 of the Central Goods and Service Tax Act, 2017 and Maharashtra Goods and Service Tax act, 2017. As per the AARA order dated August 6, 2018, input tax credit is not available on purchase of 'cash carrying' motor vehicles.

Division bench of Justice MS Sanklecha and Justice MS Sonak were hearing a writ petition filed by CMS Info Systems Pvt Ltd, one of the largest ATM cash management companies in India. Petitioners had challenged the said order of AARA.

Case Background

The petitioner had sought an advance ruling from the Advance Ruling Authority (ARA) ruling on the following two questions of law: ­

(i) Whether supply of such motor vehicles as scrap after its usage can be treated as supply in the course of furtherance of business and whether such transaction would attract GST? If yes, please provide the rate of GST and / or Compensation Cess.

(ii) If answer to question (i) is in affirmative, whether Input Tax Credit is available to CMS Info Systems Ltd. on purchase of motor vehicles i.e. cash carry vans which are purchased, used for cash management business and supplied post usage as scrap.

ARA answered the first question in the affirmative, meaning thereby that motor vehicles sold after usage as scrap would be chargeable to Goods and Services Tax. However, as far as second question was concerned, there was a difference of opinion between the members of ARA. Hence, a reference was made to AARA under Section 98(5) of the CGST Act.

AARA held that the input tax credit would not be available on purchase of cash carry vans. This was based on the ground that money is excluded from the definition of goods as provided under the GST Act, 2017. Thus, not entitled to input tax credit in view of Section 17(5) of the GST Act.


Petitioner's lawyer Sriram Sridharan argued that the concerned authority did not consider their principal submissions and hence there is a flaw in the decision-making process. Further, 'Goods' as defined in Section 2(52) of the GST Act excludes 'money' from its ambit, the meaning to be given to 'money' for the purpose of Section 2(52) of the Act would be as defined in Section 2(75) of the GST Act. Thus, 'Goods' would include the money as cash being transported by the petitioners in motor vehicles, he said.

Further, Section 17(5) of the GST Act excludes the benefit of input tax credit in respect of motor vehicles, unless used for transport of goods, Sriram submitted.

Court observed-

"We find that the fundamental submission of the petitioner before the AARA was the fact that money would stand covered by the definition of 'goods' under Section 2(52) of the GST Act so long as the same is not used as legal tender. This on the basis of the definition of money provided in Section 2(75) of the GST Act. The aforesaid principal submission though recorded, has not been dealt with at all in the impugned order.

The entire issue before the AARA as raised by the petitioner was whether the vans/motor vehicles in which the petitioners were transporting cash, would be money for the purpose of Section 2(52) of the GST Act. This aspect has not been dealt with in the impugned order dated 6th August, 2018 of the AARA."

Thereafter, Court set aside the impugned order and restored the second question before AARA. The bench noted-

"In the light of the above, we note that the decision-making process has not been complied with by the Authority. 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."

Click here to download the Order