TMI Blog2020 (11) TMI 1066X X X X Extracts X X X X X X X X Extracts X X X X ..... 5/2020/ - - - Dated:- 20-11-2020 - SHRI V.K. SAXENA , AND SHRI RAGHWENDRA KUMAR SINGH , MEMBER PROCEEDINGS (Under section 101 of the Central Goods and Services Tax Act, 2017 and the Madhya Pradesh Goods and Services Tax Act, 2017) 1. The present appeal has been filed under section 100 of the Central Goods and Service Tax Act, 2017 and the Madhya Pradesh Goods and Services Tax Act, 2017 [hereinafter also referred to as the CGST Act and MPGST Act ] by M/s. Khatwani Sales and Services LLP (hereinafter also referred to as the appellant ) against the order of Authority for Advance Ruling bearing No. 13/2020 dated 23.07.2020. 2. At the outset, we would like to make it clear that the provisions of both the CGST Act and the MPGST Act are mirror image of each other except for certain specific provisions. Therefore, unless a specific mention is made to such dissimilar provisions, a reference to the CGST Act would mean a reference to the similar provisions under the MPGST Act and vice-versa. At places we may refer it as GST Act. BRIEF FACTS OF THE CASE The appellant- M/s Khatwani Sales and Services LLP is registered with GSTIN No. 23AAUFK1834 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ii) For Transportation of Goods b) i) Supply of food and beverages, outdoor catering, beauty treatment, health services, cosmetic and plastic surgery, life insurance and health insurance except where when inward supply of goods or services or both of a particular category is used by a registered person for making an outward taxable supply of the same category of goods or services or both or as an element of a taxable composite or mixed supply; ii) membership of a club, health and fitness centre; iii) Travel benefits extended to employees on vacation such as leave or home travel concession; c) Works contract services when supplied for construction of an immovable property (other than plant and machinery) except where it is an input service for further supply of works contract service; d) Goods or services or both received by a taxable person for construction of an immovable property (other than plant or machinery) on his own account including when such goods or services or both are used in the course or furtherance of business. e) Goods or services or both on which tax has been paid under section 10 i.e. Composition Scheme. f) Goods or services or ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rea (Approx 11 Kms) from the city centres point to the prospective buyer of the vehicles. Also many of the Customers has to kept the vehicle at the service point at that point of time our Demo Vehicles only used to drop our customers at their specific locations. C) Imparting training on driving, flying, navigating such vehicles or conveyance Here main purpose of the Demo vehicle is to provide the training about the features of the vehicle which is in the course of business. Hence credit on demo cars does not fall within the restrictions placed under Section 17(5) on blocking credit on motor vehicle but is instead squarely covered by exceptions mentioned therein, being 17(5)(a)(A) and (C). Here Following points should also be considered 1) According to applicant Demo vehicle purchased is in the course of carrying out his business, the appellant is mandatory required to keep demo vehicles of each model as per their dealership agreement, of the KIA Motors Corporation and since the models keep changing at a fast pace due to competition in the market, it marks as a regular business feature for the appellant. 2) Furt ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hed towards higher cost and will be placed at a relatively disadvantageous position compared to other applicants who applied for AAR and got a favorable ruling, thus affecting the appellant's business severely. Ground 3:- GST Act does not prescribe the time within which supply should be done Section 17(5) (a) the input tax credit shall not be available on motor vehicles except when they are used for making further supply of such motor vehicles. The further supply of such demo vehicles are made after one or two years and constitutes a taxable supply and GST is paid thereon. As GST Act does not prescribe the time within which further supply should be done. Hence, the impugned tax credit should be available. Reliance is placed on Advance Ruling 1) AAR No. GOA/GAAR/07 of 2018-19/4796 dated 26/03/19 by Goa Authority: - input tax credit on the motor vehicle purchased for demonstration purpose can be availed as input tax credit on capital goods and set off against the output tax payable under GST 2) AAR No. KER/10/2018 dated 26/09/18 by Kerala Authority:- Authority held that the input tax paid by a vehicle dealer on the purchase of motor car used for d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... there. 4. Appellant in his second point, has stated that he has capitalised this purchase in the books and as per mandate of section 16 (3), he is not charging depreciation on the tax component under Income Tax Act. Hence, he is not barred from claiming input tax credit. There is nothing noteworthy here as it is a condition precedent under section 16 (3). 5. In his third point appellant has cited AAR rulings from other States and has said that if he does not get a favourable ruling he will get placed at a disadvantageous position in comparison to other applicants. 6. His fourth point claims that in the GST Act it is not mandatory to make outward supply of goods within a particular time. All that is needed is that sale should be after the event of purchase has taken place. His sale after two or more years from the date of purchase does not debar him' from claiming input tax credit. AAR has held that a sale of Demo vehicle after one or two years cannot be said that the Demo Vehicle is for further supply. AAR has also held at page 5 para number 7.3 that sale in the subsequent year of Demo Vehicle on which depreciation has been charged to be treated as a sale of used / se ..... 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