Maharashtra Appellate Authority of Advance Rulings allows input tax credit for companies using vehicles to transport cash to ATMs

The Maharashtra Appellate Authority of Advance Rulings has allowed input tax credit for companies using vehicles to transport cash to ATMs on the grounds that the money in this case should be considered as goods and not legal tender.
The appellate authority dismissed the revenue department’s contention that the special purpose vehicles were made by a company – CMS Info Systems Ltd. – to transport money under Reserve Bank of India guidelines.

“Input tax credit against GST paid on purchase, and fabrication of motor vehicles, used for carrying cash and bullions, is available to the appellant,” the appellate body said in an order in October, which was issued recently.

The AAAR said the revenue department’s arguments that money be treated differently from other goods since RBI guidelines are not applicable on other goods, was “devoid of any merit and is not sustainable… erroneous and absurd, and do not merit to be considered.” ET has reviewed a copy of the order.

“The ruling once again establishes the legal maxima that substantive benefit of input tax credit should not be denied so long as the expenditure is incurred for furtherance of business,” said Harpreet Singh, partner for indirect tax at KPMG India.

The order is applicable on the company and tax authorities of the state.

The Bombay High Court had asked the appellate body to reconsider the issue since the Maharashtra Authority of Advance Ruling had said the appellant was not eligible to claim ITC in respect of cash-carry vans as it was observed that the cash or currency being transported will not be considered as goods.