TMI Blog2021 (1) TMI 692X X X X Extracts X X X X X X X X Extracts X X X X ..... the same arc not covered by any of the exceptions given clause (A). (B) or (C) of Sec. 17(5)(a) - It is found that the eligibility for inputs tax credit on Demo Vehicles can not he decided on the basis of their capitalisation. or payment of GST at the time of their sale in the subsequent year. There is clear provision in law for admissibility of Input tax credit on motor vehicles in any of' the three conditions prescribed in clause (A), (B) and (C) of Section 17(5)(a) of GST Act. As the applicant's Demo vehicles do not comply any of the said conditions. therefore. the applicant is not eligible for Input tax credit on Demo vehicles in view of provisions of Section 17(5)(a) of GST Act in spite of the filet that the Demo Vehicles a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or sales services of vehicles. 3.3 We are tilling GST Advance ruling seeking Whether Input tax credit on the Motor vehicle purchased for demo purpose can be availed . 3.4 Applicant purchases, the vehicles from the supplier against tax invoices after paying tax and capitalizes the demo vehicles in the books of accounts, 3.5 We are of the view that in accordance with the submission. The demo vehicles which are used in the course or furtherance of business, may therefore, be entitled for Input Tax Credit (ITC). 4. QUESTION RAISED BEFORE THE AUTHORITY -- 4.1 Whether Input tax credit on the Demo vehicle purchased can be availed as the same will he capitalized in books. 5. DEPARTMENT VIEW POINT - The Joint Commiss ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... or transportation of passengers or (iii) Giving training on driving. flying. navigating such vehicles or conveyances or are used for transportation of goods. 6.4 According to the Applicant considering the above definition in his situation : - The Demo vehicles are used for furtherance of business and are used for imparting training about the features of the car and training on driving such vehicles to the prospective buyer same would he used for test drive of the similar vehicle model which will generate taxable revenue helps in furtherance of business. As sole condition for determining the eligibility of ITC on demo cars is based on Section 17(5) of CGST Act 2017. ITC' should he allowed as it satisfies the criteria me ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... al assets under head Demo Cars b) These Demo Vehicles are used for providing Trial Run to customers to understand the features of vehicle amid essential part of marketing sales promotion to facilitate supply of cars. c) Every model of cars are used for demonstration for a limited period that usually replaced every two years or 40000 kms or upto continuation of model. whichever is earlier. d) The activity does not come under the negative clause. as after the limited period of use of demo car. the vehicle are sold at WDV. e) That the manner of utilization of ITC is provided as per the provisions of Section 49 of the CGST Act. Section 18 of the COST Acts deals with availability of credit in special circumstances. As per ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hicles used for demo purpose are sold in subsequent year at WDV. The Applicant also submitted that they will abide with the provisions of Section 18 (6) of GS'I' Act at the time of sale of the Demo Vehicle. The Applicant declared that they will not claim depreciation on tax component of the capitalized Demo Vehicles. 7.3 From the submissions made by the applicant. we observe that the Applicant has relied upon the provisions of Sec. 17(5)(a) which were in fact applicable prior to Amendment Act. 2018. Now w.e.f. 1.2.19 the provisions of Sec. 17(5) reads as under : (5) Notwithstanding anything contained in sub-section (1) of Sec. 16 and sub-section (1) of Sec. 18. input tax credit shall not be available in respect of th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cles. By subsequent sale of Demo Vehicle after one or two year, it can not he said that the Demo Vehicle is for further supply. The sale in the subsequent year of Demo vehicle on which depreciation has been charged is to be treated as a sale of used second-hand vehicle, and not sale of a new vehicle. We find that the Demo vehicles used for Demo and trial to the customers are not covered in the exception Clause (A). i.e. for further supply of such vehicle: or in Clause (B) i.e. for transportation of passengers: or in Clause (C) i.e. for imparting training for driving. Hence though the Demo vehicles are for furtherance of business of the applicant. even then they are not eligible for Input tax credit in view of provisions of Section ..... X X X X Extracts X X X X X X X X Extracts X X X X
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