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TMI Blog2022 (7) TMI 181X X X X Extracts X X X X X X X X Extracts X X X X ..... prescribed by the West Bengal Authority for Advance Ruling Regulations, 2018. 1.1 At the outset, we would like to make it clear that the provisions of the Central Goods and Services Tax Act, 2017 (the CGST Act, for short) and the West Bengal Goods and Services Tax Act, 2017 (the WBGST Act, for short) have the same provisions in like matter except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the WBGST Act. Further to the earlier, henceforth for the purposes of these proceedings, the expression 'GST Act' would mean the CGST Act and the WBGST Act both. 1.2 The applicant is an authorized dealer of Hyundai Motor India Limited for supply of different ranges of motor vehicles and also carries on business activities as an authorized service station. It is submitted by the applicant that he purchases vehicles against tax invoices which are reflected in his books of accounts as capital assets and are used as demo cars for providing trial run to the customers to make them understand the features of the vehicles. 1.3 The applicant has m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... red cases, has held that the said companies can claim and set off the input tax credit on demo vehicles along with repair, maintenance & insurance under GST for discharging their liability subject to following conditions that: * the company is required to maintain up to a maximum of one demo vehicle of each model till final disposal of that demo vehicle before acquiring new demo vehicle and it is to be shown in the capital goods account; * the company will not claim the depreciation on the GST components of Demo vehicle as expenditure u/s 37 of the Income-tax Act; * the company will create GST Liability upon sales of demo vehicles as per Sec 18(6); * the company will maintain a separate account of inward and outward supply of Demo vehicles and will produce annual statement along with the Balance sheet and P&L account to the concerned Jurisdictional GST authority. 2.4 The applicant has also relied on the advance ruling pronounced in the matter of Chowgule Industries (P) Ltd (Order No. GST-ARA-18/2019-20/B-121 dated 26.12.2019) wherein the Advance Ruling Authority of Maharashtra has held that input tax credit on motor vehicles purchased for demo purposes can be availed. The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... andatory usage time of test drive is over. 4.3 Section 16 of the GST Act deals with eligibility and conditions for taking input tax credit. Sub-section (1) of section 16 entitles a registered person to take input tax credit on supply of inputs as well as capital goods made to him subject to certain conditions and restrictions which have been prescribed. Sub-section (1) of section 16 reads as follows: (1) Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person. 4.4 However, sub-section (5) of section 17 of the GST Act overrides sub-section (1) of section 16 and restricts availment of input tax credit under certain scenarios. One of such restriction as specified in clause (a) of sub-section (5) of section 17 limits the scope of input tax credit with respect to motor vehicles. The same is reproduced below for reference: "(5) Notwithstan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re, of the view that input tax credit on purchase of demo vehicles cannot be denied merely on the ground of capitalization of the vehicles in the books of accounts. 4.8 The applicant maintains the stock of the demo vehicles for a specified period of time and thereafter supplies the same, may be 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. Further, restriction imposed under section 17(5)(a)(A) shouldn't be applied on the ground that the supplies have been made after a certain period of time since there is no time limit prescribed in this regard for making such further supplies. 4.9 It is submitted by the authorised representatives of the applicant that while making purchases of any particular model of motor vehicles, the vehicle which is purchased for demonstration/test drive purposes is tagged in the Data Management Software (DMS) of Hyundai Motor India Limited. Thus, a demo vehicle is specifically recorded in the system of the company and the applicant cannot supply the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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