Refer Case Study 1 EVALUATE the correctness of Sunita Jain's response to the GST issue raised by Dev Patel.

As per Section 17(5)(i) broadly ITC is blocked on motor vehicles, vessels and aircrafts used for passenger transportation with certain exceptions. Further ITC is also blocked on certain services relating to motor vehicles, vessels and aircrafts namely, general insurance, servicing and repair and maintenance. The basic principle here is that motor vehicles, aircrafts and vessels on which ITC is blocked, the ITC on services of insurance, servicing and repair and maintenance pertaining to such motor vehicles, vessels and aircrafts is also blocked. ITC on vessels and aircrafts used for any purpose other than the eligible purpose is not allowed. Below are the eligible purposes for vessels and aircrafts: Making further taxable supply of such vessels or aircraft Making taxable supply of transportation of passengers Making taxable supply of imparting training on navigating such vessels Making taxable supply of imparting training on flying such aircrafts Transportation of goods In such cases, when used for eligible purposes, ITC on vessels and aircrafts can be availed. Similarly, when ITC on such vessels and aircrafts is allowed, the ITC on leasing, renting or hiring of motor vehicles, vessels or aircrafts is also allowed. COAL is using its aircrafts to make taxable supply of transportation of passengers. This is the core business of the company that is a taxable supply as per the GST law. As per the discussion in foregoing paras, it is therefore an eligible purpose for which ITC is allowed to be taken. It also follows that the ITC on the lease rental of such aircrafts is also allowed. Therefore, Sunita Jain can advise Dev Patel that ITC is allowed both on aircrafts used in COAL's business, services of general insurance, servicing, repair and maintenance, of said aircrafts as well as on the lease rental of these aircrafts, covered under the sale and lease back arrangement.