CMS info Systems Ltd.

, In Re
 Citation

[2020] 117 taxmann.com 318 (AAAR MAHARASHTRA)

 Introduction

1. Proceedings under section 101 of the Central Goods and Services Tax Act,
2017 and the Maharashtra Goods and Services Tax Act, 2017. Provisions
under both the acts are similar except for certain provisions.

2. M/s CMS Info Systems Limited had filed application for advance ruling
under the provision of section 97(1) of the CGST Act, 2017. When 2
members differed in opinion of the issues raised, they referred the same to the
Appellate Authority for Advance Ruling in terms of section 98(5) of the
CGST Act, 2017, where they held that the Appellant was not eligible to
claim ITC in respect of the Cash Carry Vans as it was observed that the
cash or currency, will not be considered as goods as per the definition of
goods in section 2(52) of the CGST Act, which excludes money from the
purview of the goods.

3. Aggrived by the said AAAR Order on 6-8-2018, Appelant filed the writ
petition in Bombay HC, Upon which court set aside the said order and directed
AAAR to hear and decide the case after the considering the appelant’s
submissions.

 Facts of the case

1. The appellant is having cash management network pan India, i.e. providing
cash management services such as providing and installation of ATMs
across India, Transporting cash from currency chest to the banks
branches and Cash pickup from and to various banks through security
vans (Cash Carrying Vans).

2. The appellant purchased raw motor vehicles and requisite fabrication and
converted as cash carrying vans. Appellant paid Central Excise Duty and
 Value Added Tax when purchased the raw motor vehicles Pre-GST era
and he paid GST on fabrication of the vehicles.

3. When the vans can’t be used further, appellant sell these as Scrap. He
approached AAR for below questions: (i) 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, 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 Limited on purchase of motor vehicles i.e. cash
carry vans which are purchased, used for cash management business and
supplied post usage as scrap.

4. AAR held that supply of motor vehicles i.e. cash carry vans as scrap after
its usage will be treated as supply in the course or furtherance of business
in terms of the provision of section 7 of the CGST Act, 2017 and such
transaction would attract GST as the disposal of cash carrying van is a
transaction ancillary to business in so much as the sale proceeds of such
vans is treated as income and reflected in P&L Account, thereby marking
such transaction as taxable supply attracting GST thereon. Matter referred
to AAAR as there is difference of opinion on the second issued raised in this
case

 Issues in the case

1. whether the money being transported by the Appellant in the cash carry vans
can be construed as "goods" or otherwise for the purposes of determining the
availability of Input Tax Credit of the GST paid on the purchase and
fabrication of the subject transport vehicles.

 Contentions of Appellant

1. Submits that they were lawfully eligible and entitled for input tax credit of the
GST paid on standard motor vehicle and also GST paid on the fabrication of
the vehicles to suit the need for cash carrying vehicle.

2. According to section 17(5)(a) of CGST Act, 2017, input tax credit on

motor vehicles and other conveyance is not available; however, the
 exception has been carved out inter alia to the motor vehicles and other
conveyances used for transportation of goods.

3. As per Section 2(52) of CGST Act, "goods" means every kind of movable
property other than money and securities but includes actionable claims,
growing crops, grass and things attached to or forming part of the land which
are agreed to be severed before supply or under contract of supply.

4. As per Section 2(75) of CGST Act, "money" means the Indian legal tender
or any foreign currency, cheque, promissory note, bill of exchange, letter of
credit, draft, pay order, traveler's cheque, money order, postal or electronic
remittance or any other instrument recognized by the Reserve Bank of India
when used as a consideration to settle an obligation or exchange with Indian
legal tender of another denomination but shall not include any currency that
is held for its numismatic value.

5. In the instant case, the currency transported by the appellant is for the
purpose of carrying out the business of maintaining ATMs by the
Appellant and hence, the Appellant are not using the same as a
consideration for settling of any obligation. It is once again re-iterated that
currency/cash is being transported by the Appellants and in support thereof,
copy of CA Certificate dated 25-9-2017 and Draft Red Herring prospectus
dated 27-9-2017 is enclosed.

6. Submits that the cash carry vans are used for transportation of goods as
the currency being transported is not covered under the definition of
'money' and since the motor vehicle converted into the cash carry vans
are used for transportation of goods, input tax credit of tax paid is
admissible going by the exclusion from the bar on availability of input tax
credit as stipulated under section 17(5)(a)(ii) of CGST Act.

7. Emphazises on the phrase "In this act, unless context otherwise requires” -if
there be something in the context to show that the definition could not be
applied. He interprets that the intention of the legislature in excluding
money from the definition of "goods" is not to levy CGST on supply of
money as otherwise CGST is leviable on supplies of intra- state supply of
goods.
 8. Rule 138 (14) which carves out goods the transportation of which would not
require the preparation of e-way bill which says "currency" under the title
"description of goods" further substantiates the contention of the Appellant
that the currency transported by the cash carry van is "goods".

9. The provision of the Motor Vehicle Act, 1988 assigned meaning to

"goods" under section 2(13), "goods carriage" under section 2(14) and
"transport vehicle" under section 2(47) would also substantiate that the
currency would be treated as goods.

10. Notification No. 2/2017-Central Tax (Rate) dated 28-6-2017 at Sr. No. 117
provides full exemption for Rupee notes when sold to Reserve Bank of
India falling under chapter/heading 48/4907 would also substantiate the
Appellants' claim that currency is covered under "goods”

11. The certificate of registration and also certificate of fitness issued by the
Motor Vehicle Department of Govt., of Maharashtra certifying cash
carrying vans to be a 'goods carrier' and 'goods vehicle' also support the
Appellant stand.

12. He further submitted that the Appellant are carrying out the business as
defined in section 2(17) of the CGST Act and without currency being
transported by the Appellant could not have rendered supply of business
support service on which GST is paid. Hence denial of input tax credit of
tax paid on motor vehicle converted into cash carry van is incorrect and
submits 3 judgements in his favour

 Contention of Respondant

1. The jurisdictional officer contend that The cash carrying vans cannot be
treated merely as transport vehicles, carrying the goods as claimed by the
appellant, as it is a special purpose vehicle which is deployed to collect the
currency under the security guards with arms and with 2 supervisors as per the
Guidelines of Reserve Bank of India letter dated 06th April, 2018.

2. The appellant transports and manages "the money" which is different from
'goods' even in the eyes of the banking industry and RBI. It is because of this
 reason that the RBI has prescribed special safeguards specifically for "the
money”

3. He contend that The appellant contention that provision of Motor Vehicle Act
and the exclusion of money from the scope of e-Way bill should take
precedence over the provisions of the CGST Act, 2017, has been made
without having any rational or basis.

 Judges opinion

Personal hearing is attended by the Adv. Padmavati Patil on behalf of petitioner and
Jurisdictional officer Rishi Yadav on behalf of Respondants.

1. It is held that what is being transported by them in the cash-carry vans is

not the money but the goods for them, as they cannot use such money for
any purpose, whatsoever. This fact is also emanating from the clause 2.7
of the agreement entered between the Appellant (referred in the
Agreement as "COMPANY") and its client Canbank Computer Services
Ltd. (CCSL).

2. As it has been established that the Appellant cannot use the money, which
belong to their clients, at any stage of the activities carried out by them, thus
ruling out any possibility of the subject money, transported by them, as being
used as legal tender at any stage of the performance of the services rendered
by them, it can adequately be inferred that the subject money, transported in
the cash carry vans by them, ceases to be anything except goods. This
strengthened by the phrase “ In this Act, unless the context otherwise requires”
implies that meanings assigned to the various terms under this section of the
act is dependent upon the context of the case at hand.

3. Proposition is supported by rule 138(14) and its Annexures prescribed under

CGST Rules, 2017, relied upon by the Appellant to establish that the money
has been included in the Annexure along side the other goods specified
therein, which will not require any E-way Bill for their movement or
transportation by motorised conveyances by from one place to the another. it
can decisively be inferred that money under question is nothing but goods.
 4. The compliance of the guidelines issued by the RBI will not detract the subject
money from being goods. Further, non-applicability of the RBI guidelines on
the goods other than money is quite obvious, as the RBI is the regulatory
authority only in the matter related to the money and not for all the goods.
Hence, such arguments, put forth by the Respondent is erroneous and absurd,
and do not merit to be considered.

5. when it has been established that money, transported by the Appellant in the
cash -carry vans, can be considered as goods, ITC in respect of the cash carry
vans used for the transportation of cash will be available to the Appellant in
accordance with provisions of section 17(5)(a)(ii) of the CGST Act, 2017

6. We, hereby, hold that Input Tax Credit against the GST paid on the purchase,
and fabrication of the motor vehicles, used for carrying cash and bullions, is
available to the Appellant.

 Relevant cases

1. Printers (Mysore) Ltd. v. Asstt. CTO 1994 taxmann.com 755 (SC)

2. Thomas Cook India Ltd. v. Collector of Customs 1994 (71) ELT 724 (Tri. -
Delhi)

3. Anyanwu Marteena Uchechi, In re 2015 (329) ELT 750 (GOI)