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The Demo Vehicles received by the Appellant have never been received with the intent to simply 'further supply/ sell' as such. Input Tax Credit on these vehicles, thus, cannot be allowed.

Input tax credit— Section 16 of CGST Act— The present appeal has been filed against the Advance Ruling order.

The Applicant is an authorised Dealer of Maruti Suzuki India Limited.

From the Questions for which Advance Ruling was applied and the present appeal has been filed, the issue for determination presently is admissibility of Input Tax Credit (ITC) on the Appellants' motor vehicles which they sell after limited period use as demo cars.

Section 16 of CGST Act provides that a recipient Taxpayer is entitled to take the ITC if it has in possession of the duly issued invoices and the goods or services have been received and are intended for furtherance of business.

As discussed above certain restriction have been imposed on ITC availment in respect of the goods and services in Section 17(5). One such restriction expressly mentioned under Section 17(5)(g) viz-, “(g) goods or services or both used for personal consumption.” It can be inferred that sub-Section 17(5)(g) restricts ITC on the Motor Vehicles as these are potential items of personal/non-business use.

The law provides for ITC in case of “further Supply” of said vehicles . But here, first the vehicles are purchased, then they are diverted and used for Demonstration of 2 years or so, and in the first demonstration run it loses the character of the new vehicle and demo vehicles is sold akin to second hand goods and which is different from new Vehicle and accordingly treated differently under GST law. Thus it cannot be said that the demo vehicle is for further supply of such motor vehicles'. This very restricted and specific provision has been provided in law for Motor Vehicles. The purpose and intent of the law is thus very clear. Thus by allowing the ITC this way will be ultra vires the basic provisions of 'further supply of such motor vehicles'.

So it appears that the Demo Vehicles received by the Appellant have never been received with the intent to simply 'further supply/ sell' as such. Input Tax Credit on these vehicles, thus, cannot be allowed.

Hed that— 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.

The Demo Vehicles received by the Appellant have never been received with the intent to simply 'further supply/ sell' as such. Input Tax Credit on these vehicles, thus, cannot be allowed.

Input tax credit— Section 16 of CGST Act— The present appeal has been filed against the Advance Ruling order.

The Applicant is an authorised Dealer of Maruti Suzuki India Limited.

Hed that— 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.