ITC available on motor vehicle purchased to provide trial runs to customers: AAR
[Chowgule Industries (P.) Ltd., In re [2019] 107 taxmann.com 293 (AAR - Goa)]
The Applicant is an authorized dealer of Maruti Suzuki India Ltd.. for sale of motor vehicles and spares. It has sought an Advance Ruling to determine availability of ITC on motor vehicle purchased for demonstration purposes.
The Authority for Advance Rulings observed that the vehicles purchased from suppliers are being
capitalized by the applicant in the books of account. The vehicles are used as demo cars to provide trial runs to customers to understand the features of vehicle. Those demo vehicles are used only for a specified period. GST is charged when such demo vehicles are sold. Therefore, sale of demo vehicle is a further supply of such vehicle which is excluded from the provisions of blocked credits in GST. Also, the capital goods which are used in the course or furtherance of business are entitled to ITC. Therefore, the Authority for Advance Rulings held that ITC on motor vehicle purchased for demonstration purposes can be availed as ITC on capital goods and eligible to be set-off against output tax liability.
[Chowgule Industries (P.) Ltd., In re [2019] 107 taxmann.com 293 (AAR - Goa)]
The Applicant is an authorized dealer of Maruti Suzuki India Ltd.. for sale of motor vehicles and spares. It has sought an Advance Ruling to determine availability of ITC on motor vehicle purchased for demonstration purposes.
The Authority for Advance Rulings observed that the vehicles purchased from suppliers are being
capitalized by the applicant in the books of account. The vehicles are used as demo cars to provide trial runs to customers to understand the features of vehicle. Those demo vehicles are used only for a specified period. GST is charged when such demo vehicles are sold. Therefore, sale of demo vehicle is a further supply of such vehicle which is excluded from the provisions of blocked credits in GST. Also, the capital goods which are used in the course or furtherance of business are entitled to ITC. Therefore, the Authority for Advance Rulings held that ITC on motor vehicle purchased for demonstration purposes can be availed as ITC on capital goods and eligible to be set-off against output tax liability.
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