TMI Blog2018 (10) TMI 514X X X X Extracts X X X X X X X X Extracts X X X X ..... e capital goods which are used in the course or furtherance of business, is entitled for input tax credit. As the impugned purchase of demo car is in furtherance of business, the applicant is eligible for input tax credit. Furthermore, this activity does not come under the negative clause, as after a limited period of use as demo car, the vehicles are sold at the written down book value. The a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... orized Representative: Adv. Harisankar. V. Menon In the motor vehicle industry, demonstration vehicle is an indispensable tool for promotion of sales by providing trial run to customers. It is a business requirement that motor car dealer shall compulsorily acquire the demonstration vehicles from principal supplier. These purchases are capitalized in the books of accounts excluding tax componen ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ly two years or 40,000 kms. whichever is earlier. As per Section 16(1) of the GST Act, every registered person shall be entitled to take credit of input tax charged on any supply of goods or services or both which are used or intended to be used in the course or furtherance of his business. The petitioner purchases the vehicles from the supplier against tax invoices, after paying taxes. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... The demo cars are being used only for a specified period. Later on, when demo cars are sold at the written down book value, applicable GST is satisfied at that point of time. GST Act does not prescribe the time within which further supply is to be effected. So much so, the embargo under Section 17(5) will not apply and the applicant is entitled for input tax credit as against demo cars. The iss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. In the case of supply of capital goods on which input tax credit has been taken, the registered person shall pay an amount equal to the input tax credit taken on the said capital goods reduced by such percentage points as may be prescribed or the tax on the transaction value of such capital goods determined as value of taxable supply, whichever is higher. In view of the observations stated ..... X X X X Extracts X X X X X X X X Extracts X X X X
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