In re A2MAC1 India Private Limited (GST AAR Tamilnadu)
Tamil Nadu Authority for Advance Ruling (AAR) has held that M/s A2MAC1 India Private Limited is not eligible to claim Input Tax Credit (ITC) on the purchase of motor vehicles used for automobile benchmarking services. The ruling clarifies the applicability of Section 17(5)(a) of the CGST Act, 2017, which restricts ITC on motor vehicles unless they are used for specific taxable supplies.
The applicant, engaged in providing Collaborative Automobile Benchmarking Services, disassembles new vehicles to analyze technology, cost, and performance insights. These research findings are provided to clients, including Original Equipment Manufacturers (OEMs) and Original Equipment Suppliers (OESs), through an online subscription platform. The company argued that since the vehicles are used exclusively for research purposes before being sold as scrap, they should qualify for ITC.
The applicant relied on Circular No. 231/25/2024-GST, which allows ITC for motor vehicles used as demo vehicles by authorized dealers. Additionally, they cited AAR rulings in A.M. Motors and Chowgule Industries Pvt. Ltd., where ITC was granted for demo vehicles. However, the Tamil Nadu AAR ruled that these cases were not comparable, as demo vehicles are directly used for resale, whereas the applicant’s vehicles are used for research and then scrapped. Similarly, a past ruling in Narsingh Transports, which allowed ITC on leased vehicles, was deemed inapplicable due to differing circumstances.
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