The Maharashtra Appellate Authority for Advance Ruling for Goods and Services Tax (AAAR-GST) has ruled that ‘money’ is not ‘goods’. Accordingly, it decided against giving Input Tax Credit (ITC) to CMS Info Systems on purchase of motor vehicles, that is, cash-carrying vans that are purchased and used for cash management business and supplied, post usage, as scrap.
“If ‘money’ is not covered as ‘goods’ in the definition of ‘goods’ under CGST Act, then it is not ‘goods’ for everyone and it cannot be said that it is not ‘goods’ for general perception and it is ‘goods’ for the appellant (CMS),” the AAAR said while disposing the matter. The matter was referred to the appellate body when members of the Advance Ruling Authority (AAR) differed in their opinion in deciding on one of the two issues/questions raised. The questions were: a) whether supply of such motor vehicles as scrap after its usage can be treated as supply in the course or furtherance of business and whether such transaction would attract GST? If yes, then what would be rate of GST and/or Compensation Cess?; and b) If answer to the first question is in the affirmative, whether ITC is available to the company on purchase of motor vehicles. For the first question, the AAR held that supply of cash carry vans as scrap after its usage will be treated as ‘supply’ in the course or furtherance of business and such transaction would attract GST. However, there was no ruling for the second question as two members of AAR failed to reach a consensus.
The company argued that it was lawfully eligible and entitled for ITC of the GST paid on standard motor vehicle and also GST paid on the fabrication of the vehicles to suit the need of cash-carrying vehicle. Though, ITC on motor vehicles and other conveyance is not available, there is one exception for the motor vehicles and other conveyances being used for transportation of goods. In other words, if the motor vehicles and conveyance is used for transportation of goods, ITC on motor vehicles is available.
Here the basic issue was to find ‘money’ in the definition of term ‘goods.’ The Appellate Authority said “the very first line of the definition, i.e., ‘goods’ means every kind of movable property other than money/ clearly excludes money from the purview of goods under the GST law.” Similarly, ‘money’ means the Indian legal tender. ‘But shall not include any currency that is held for its numismatic value’. Since the cash-carry vehicles are deployed to carry cash and bullion for other than for numismatic purposes, the cash carried by them is to be construed as money and not goods.
GST Council decision
The Authority also quoted decisions taken by the GST Council on July 21 where it was recommended extension of ICT in respect of motor vehicles used for transportation of money for or by a banking company or financial institution. It concluded that recommendations by GST Council further strengthen “our finding above that money being transported by the Appellant in the cash carry van is certainly not goods.”
Anita Rastogi, Indirect Tax Partner at PwC, said the GST provisions need to be interpreted holistically. There is a golden rule of interpretation as per the Supreme Court that if the literal meaning leads to unintended result, one has to look at a wider context. “For an organisation providing cash-carrying services, it is but natural to consider that they are providing transportation services,” she said.