ITC of GST for purchase of motor vehicles in business other than that of provider of goods and/or passenger transport service
This note is excludes the Motor vehicles used by the goods or passenger transporters.
The motor vehicles (other than special purpose motor vehicles such as cranes etc.) are also used by a manufacturer or job worker or works contractor or trader for transport for goods or staff and workers. The consultants etc. also use the motor vehicles for transport of their staff etc.
Prior to implementation of GST w.e.f. 1st July 2017 the Vehicle for transport of passengers and goods suffered excise duty and CST or VAT (referred to herein as “the taxes under Old regime”). The input credit against such taxes and duty was not available, except under some specific instances, to the manufacturers, traders, works contractors, job-workers and the service providers others than service for transport of goods and/or passengers (collectively referred to herein as “the business entities”
The provisions related to input credit under GST law are similar to that of old regime. Section 17 (5) of CGST Act provides for denial of the input credit on motor vehicles and other conveyances except when they are used
i) for making the following taxable supplies, namely:—
(a) further supply of such motor vehicles or conveyances ; or
(b) transportation of passengers; or
(c) imparting training on driving, flying, navigating such motor vehicles or conveyances;
ii) for transportation of goods;
In view of the above the input credit, for inward supply of vehicles and other expenses incurred in relation to such vehicles, shall not be deniable in following cases:
1. where the motor vehicles are used by the business entities referred here in above for transport of inputs, semi-finished goods, out-put and/or capital goods, plant, machinery, spares, stores and/or fuel,
2. Where the business entities referred to here-in above use the vehicle for transport of its staff or workers on chargeable basis