Case Law Details
In re BMW India Pvt. Ltd. (GST AAR Haryana)
Whether the Applicant-unit is entitled to avail input tax credit of IGST and Compensation Cess paid on receipt of cars (on stock-transfer basis) for use in relation to specified business activities and thereafter onward supply to dealers after use by the Applicant-unit for a limited period of time?
There is no doubt that in the motor vehicle industry, demonstration vehicle is an indispensable tool for promotion of sales by providing trial runs to the customers. These demo cars are used for demonstration purpose for the prospective customers and after a specific period of time, these are sold off for the book value, paying the applicable taxes at that point of time.
During discussions it has been shown to the authority that these demo cars are received by the applicant against tax invoices and are reflected in their books as capital assets. The general provisions for availing input tax credit on capital goods which are used or intended to be used in the course or furtherance of business are contained in section 16 (1) and section 18 (1) of the CGST/HGST Act, 2017 read with the relevant rule 43 of the CGST/HGST Rules.
It is also worth noting that the specific provisions regarding admissibility of input tax credit on motor vehicles for transportation of persons upto a seating capacity of not more than 13 person are contained in section 17 (5) of the CGST/HGST Act 2017.
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