The Goods and Services Tax paid on the purchase of demo vehicles cannot be availed as input Tax Credit and set off against output tax payable under the GST.
Input tax credit— In the instant case, applicant is a registered taxpayer and is an authorized dealer of Maruti Suzuki India Limited. Alongwith the purchase of vehicles for the purpose of further supply, the applicant purchases demo cars for demonstration purpose.
Issue for Ruling:
2.1 Whether Input Tax Credit (ITC) can be availed on such capital goods (demo cars) and set off against output tax payable under GST.
2.2 Whether Input Tax Credit (ITC) can be availed on the ancillary input services such as insurance and repair and maintenance availed in respect of the demo cars.
Even if, the demo vehicles are capitalized in the book of accounts and are used or intended to be used in the course or furtherance of business, the Input Tax Credit with respect to these vehicles cannot be availed by the recipient.
The demo vehicles are not used for the purposes specified under Section 17(5)(a) i.e. for making taxable supplies, including further supply of such motor vehicles and are, therefore, not covered under exception provided under section 17(5)(ab)(i).
Held that— As far as the admissibility of Input tax credit prior to coming into effect of Notification No. 2/2019- Central tax dated 29th January, 2019, the Advance ruling Authority is of the view that the same was inadmissible with respect to purchase of Demo vehicles as well as ancillary input services in light of the provisions contained in Section 17(5)(a) and Section 17(2) respectively.
The Goods and Services Tax paid on the purchase of demo vehicles cannot be availed as input Tax Credit and set off against output tax payable under the GST.
Input tax credit— In the instant case, applicant is a registered taxpayer and is an authorized dealer of Maruti Suzuki India Limited. Alongwith the purchase of vehicles for the purpose of further supply, the applicant purchases demo cars for demonstration purpose.
Issue for Ruling:
2.1 Whether Input Tax Credit (ITC) can be availed on such capital goods (demo cars) and set off against output tax payable under GST.
2.2 Whether Input Tax Credit (ITC) can be availed on the ancillary input services such as insurance and repair and maintenance availed in respect of the demo cars.
Even if, the demo vehicles are capitalized in the book of accounts and are used or intended to be used in the course or furtherance of business, the Input Tax Credit with respect to these vehicles cannot be availed by the recipient.
The demo vehicles are not used for the purposes specified under Section 17(5)(a) i.e. for making taxable supplies, including further supply of such motor vehicles and are, therefore, not covered under exception provided under section 17(5)(ab)(i).
Held that— As far as the admissibility of Input tax credit prior to coming into effect of Notification No. 2/2019- Central tax dated 29th January, 2019, the Advance ruling Authority is of the view that the same was inadmissible with respect to purchase of Demo vehicles as well as ancillary input services in light of the provisions contained in Section 17(5)(a) and Section 17(2) respectively.