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2020 (1) TMI 741 - AAR - GSTCENVAT credit - capital goods - inward supply of Motor Vehicle which are used for Demonstration purpose in the course of business of supply of Motor Vehicle - whether the credit can be utilised for payment of output tax payable? HELD THAT:- As per Section 2(19) of the CGST Act, 2017, “capital goods” means goods, the value of which is capitalised in the books of account of the person claiming the input tax credit and which are used or intended to be used in the course or furtherance of business - the Demo cars in the subject case fulfill the definition of capital goods, are received under a Tax Invoice and are used or intended to be used in the course or furtherance of business i.e. sale of motor vehicles - the applicant is eligible to avail ITC on capital goods. Whether Section 17 (5) of the said Act debars the applicant from taking credit? - applicant has submitted that every model of demo cars is used by them for demonstration only for a limited period i.e. every two years or 40,000 Kms whichever is earlier - HELD THAT:- Since the applicant will be making further supplies of the Demo vehicles, and there is no time limit prescribed in the GST Act for making such further supplies, we are of the opinion that they will be eligible to avail ITC in the subject case. Whether the ITC availed by them on capital goods can be utilized for payment of output tax payable under this Act? - HELD THAT:- The manner of utilization of ITC is provided as per provisions of Section 49 of the CGST Act. Section 18 of the CGST Act deals with availability of credit in special circumstances. As per Section 18(6) of the CGST Act, when there is a supply of capital goods on which ITC has been taken, as in the subject case then the applicant shall pay an amount equal to the ITC taken on the said Demo Vehicles reduced by such percentage points as may be prescribed or the tax on the transaction value of such Demo Vehicles, whichever is higher.
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