Home Case Index All Cases GST GST + AAR GST - 2024 (5) TMI AAR This
Forgot password New User/ Regiser ⇒ Register to get Live Demo
2024 (5) TMI 37 - AUTHORITY FOR ADVANCE RULING, WEST BENGALEntitlement to claim input tax credit charged and paid on inward supply of car from Mercedes Benz India which are used for demonstration purpose to the potential customer interested in buying Mercedes Benz Car, commonly known as Demo cars - classification and rate of tax at the time of sale of demo car - amount received by the applicant from Mercedes Benz INDIA towards reimbursement of “Loss on Sale of Demo Car” constitute as supply or not. Admissibility of input tax credit on purchase of motor vehicles which are initially used by the applicant for demonstration purpose and thereafter supplied by him - HELD THAT:- The applicant is not engaged in trading of motor vehicles. In the case in our hand now, the applicant has entered into an agreement with MB INDIA to provide facilitation services for sale of motor vehicles where the applicant acts as a self-employed commercial agent with the responsibility of brokering the sales of vehicles on behalf of MB INDIA. Admittedly, the supply of motor vehicles to the end-customers is made by MB INDIA. The applicant maintains the stock of the demo vehicles for a specified period of time and thereafter supplies the same which may be made at a price lower than the purchase value of the said vehicle. However, the provisions of the GST Act nowhere specifies that input tax credit shall not be available in respect of any outward supplies which is made at a price lower than its procurement value - the fact that the condition of a demo vehicle at the time of its further supply has undergone some deterioration does not detract from the reality that the vehicle when supplied by the applicant has ceased to be such vehicle that was purchased. The demo vehicles are purchased all along for further supply with the condition that they will be kept for a specific period of time. The restriction of input tax credit as imposed in section 17(5)(a)(A) of the GST Act is not applicable on purchase of demo vehicles which are supplied by the applicant after the specified time for providing test drive facility. Classification and rate of tax at the time of sale of demo car - HELD THAT:- Chapter 87 of the CUSTOMS TARIFF ACT, 1975 deals with ‘vehicles other than railway or tramway rolling-stock, and parts and accessories thereof’. Further, Chapter 8702 covers ‘motor vehicles for the transport of ten or more persons, including the driver’. Furthermore, Chapter 8703 covers ‘motor cars and other motor vehicles principally designed for the transport of persons (other than those of heading 8702), including station wagons and racing cars’ - there would be no change of classification of the demo vehicle, at the point of sale by the applicant. Rate of tax of demo car - HELD THAT:- The outward supply of demo car would attract same rate of tax of its inward supply subject to the provision of section 14 of the GST Act. Whether the amount received by the applicant from MB INDIA towards reimbursement of “Loss on Sale of Demo Car” would constitute as supply or not? - HELD THAT:- In the case at hand, the applicant has entered into an agreement with MB INDIA with a specific condition towards ‘Demo Car Loss Sharing” knowing very well that it may suffer a loss at the time of selling of demo vehicle since the vehicle would have undergone some deterioration while providing test drive facility to the prospective buyers. In other words, MB INDIA enters into the agreement with a promise to compensate where the applicant would suffer a loss on sale of demo vehicle - the applicant has entered into the agreement to tolerate the act of suffering loss for a consideration. Undisputedly, the applicant has chosen to tolerate the act for a consideration as per the agreement and has agreed to tolerate the act in the course or furtherance of the business - ‘agreeing to tolerate an act’ having SAC 999794 is classifiable under ‘Other Miscellaneous services’ and is taxable @ 18% vide serial number 35 of Notification No. 11/2017-Central Tax I(Rate) dated 28.06.2017, as amended.
|