TMI Blog2022 (3) TMI 487X X X X Extracts X X X X X X X X Extracts X X X X ..... r prolonged use, which may even not restrict to 12 months as mentioned by the Appellant. If the argument of the party is allowed then in that case all the motor vehicles, irrespective of the nature of Supply will be eligible for ITC across the industries. It will no longer be a restricted clause for Car Dealers, but will be an open-clause for all the trade and industry to avail the ITC on all the Vehicles purchased by them. This has never been the intent of the Parliament - in the very first demonstration run demo car loses the character of the new motor 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, so the demo car is not an input. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t Gurugram as a State administered taxpayer for running a training centre for the training of Engineers and Marketing professionals etc. They get BMW branded vehicles made in Chennai plant as inter-state stock transfer on which IGST and Compensation Cess have been paid, and use these vehicles for 'a very limited period of about 12 months', as under: 'Training fleet' : Vehicles for training of Dealers and Authorized Service Centre operators; 'Press fleet' : Vehicles provided to media houses/ senior journalists for test purpose; 'Marketing fleet' : Vehicles for undertaking various marketing and promotional activities such as road shows, exhibitions etc. 'Sales fleet' : ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n receipt of cars (on stock transfer basis) for use in relation to specified business activities and thereafter onwards supply to dealers after use by the Applicant unit for a limited period of time? RULING by Advance Ruling Authority (AAR): The Advance Ruling Authority (AAR) gave following Rulings on the above mentioned Question: RULING: In the backdrop of Discussion and Findings in the foregoing Paras, the Applicant is not entitled to avail input tax credit on motor vehicles put to use as per their submissions made in Para 5 above. In the Discussion Findings portion of the Order, the Advance Ruling Authority had found/ noted the following:- There is no doubt that in the Motor Vehicle Industry, demonstra ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... missible; The AAR has not considered the submissions; The Ruling is vague/cryptic; They are entitled to take Input Tax Credit (ITC) as the vehicles were further used for specified taxable supply mentioned Under Section 17(5)(a)(i)(A); That, vehicles were always intended to be further supply by the Appellant after specified use; That, no time limit has been prescribed under CGST Act for further supply of vehicles; That, learned authority had failed to adhere to the provisions of Section 98(6) of the CGST Act. RECORDS OF PERSONAL HEARING: The personal hearing in the case was conducted on 24.03.2021. Sh. Murlidharan, Advocate appeared through Video Conference before the Members of the Appellate Author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ant has submitted that they are capitalizing the Motor Vehicles subjected to the mentioned usage. Thus, apparently ITC should be admissible on these vehicles, as 'capital goods'. Section 16 of CGST act provides that a recipient Taxpayer is entitled to take the ITC if it has in possession, the duly issued invoices and the goods or services have been received and are intended for furtherance of business. Further the restrictions under Section 17 for availment of ITC on certain goods and services. One such purpose is as 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 potenti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rized Service Centre operators; 'Press fleet' : Vehicles provided to media houses/ senior journalists for test purpose; 'Marketing fleet' : Vehicles for undertaking various marketing and promotional activities such as road shows, exhibitions etc. 'Sales fleet' : Vehicles assigned to corporate sales team for giving it to customers for test drive and product experience; We find that none of the uses to which the BMW Vehicles are put to, fits 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' i.e further supply as such , but are first put to the mentioned uses. These are disposed of after prolonged use, which ..... X X X X Extracts X X X X X X X X Extracts X X X X
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