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2022 (3) TMI 488 - AAAR - GSTInput tax credit - credit can be availed on such Capital Goods (demo cars) and set off against output tax payable under GST or not - credit can be availed on ancillary input services such as insurance and repair and maintenance availed in respect of demo cars - HELD THAT:- 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 - 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 Demo Vehicles in respect of which the Question about admissibility of ITC has been raised for Advance Ruling, have been used, have been used for the purpose of demonstration before the prospective customers. Then they are sold like second hand goods. 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' - the use to which the Demo Vehicles are put to, does not fit into the uses which find mention in sub-Section 17(5). The vehicles under question are not meant for 'further supply of such motor vehicles', but are first put to the mentioned uses. These are disposed of after prolonged use, which may even not restrict to 2 years as mentioned by the Appellant. 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 - under Section 17(5)(ab), the credit of the input services of repair/ insurance/ maintenance used in respect of said vehicles with seating capacity up to 13 passengers, cannot be allowed.
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