In re Platinum Motocorp LLP (GST AAAR Haryana)
We find that use to which the Demo Vehicles are put to, does not fit into the uses which find mention in sub-Section 17(5). The vehicles under question are not meant for ‘further supply of such motor vehicles’, but are first put to the mentioned uses. These are disposed of after prolonged use, which may even not restrict to 2 years as mentioned by the Appellant.
As regards to the Applicant’s alternative contention that the ITC may be allowed as Input, we have observed that in the very first demonstration run demo car loses the character of the new motor vehicle and demo vehicles is sold akin to second hand goods and which is different from new Vehicle and accordingly treated differently under GST law, so the demo car is not an input.
So it appears that the Demo Vehicles received by the Appellant have never been received with the intent to simply ‘further supply/ sell’ as such. Input Tax Credit on these vehicles, thus, cannot be allowed.
FULL TEXT OF THE ORDER OF APPELLATE AUTHORITY FOR ADVANCE RULING, HARYANA
The present appeal has been filed under Section 100(1) of Central Goods and Services Tax Act, 2017/ Haryana Goods and Services Tax Act, 2017 (hereinafter referred to as CGST Act/HGST Act, respectively) by M/s Platinum Motocorp LLP, Manesar (hereinafter referred to as the “Appellant”) against the Advance Ruling No. HAR/HAAR/R/2018-19/40 dated 01.03.2019.
A copy of order dated 01.03.2019 of the Advance Ruling Authority was received by the appellant on 13.09.2019 and the appeal has been filed on 11.10.2019 which is within time.
BRIEF FACTS OF THE CASE:
The Facts of the case, as available from ‘Facts and Issues of Ruling’ in the Appeal submitted vide FORM ‘GST ARA-02’ by M/s Platinum Motocorp LLP, are that the Applicant is registered in GST at Gurugram as a Central Government (CBIC – Central Board of Indirect Taxes & Customs) administered taxpayer and is an authorised Dealer of Maruti Suzuki India Limited.
The Applicant purchases ‘Demo Cars’ for demonstration purpose along with the purchases of vehicles for further supply. Each Demo car is used for demonstration for a maximum period of 2 years from the date of purchase after which it can be sold as the second-hand car.
The Appellant maintains that GST is paid on taxable value as per Section 18(6) of the CGST Act 2017 viz.
“(6) In case of supply of capital goods or plant and machinery, on which input tax credit has been taken, the registered person shall pay an amount equal to the input tax credit taken on the said capital goods or plant and machinery reduced by such y percentage points as may be prescribed or the tax on the transaction value of such capital goods or plant and machinery determined under section 15, whichever is higher”
Appellant submits that after use of the Demo Cars for demonstration purposes before the prospective buyers for a specific period these are sold off, on payment of GST. From the above it is clear that, such vehicles are capitalized in the book of accounts and when sold, the GST is paid on the transacted value.
QUESTIONS on which Advance Ruling was requested by the Appellant:
“Whether Input Tax Credit (ITC) can be availed on such Capital Goods (demo cars) and set off against output tax payable under GST. “
“Whether Input Tax Credit (ITC) can be availed on ancillary input services such as insurance and repair and maintenance availed in respect of demo cars. “
RULING by Advance Ruling Authority (AAR):
The Advance Ruling Authority (AAR) gave following Rulings on the abovementioned Questions:
“RULING:
So in the light of above discussion the Ruling of the Authority on the questions raised in the application is as under:-
“The Goods and Services Tax paid on the purchase of demo vehicles cannot be availed as Input Tax Credit and set off against output tax payable under the GST.
No Input Tax Credit can be availed on the ancillary Input Services such as Insurance and Repair & Maintenance in respect of above-mentioned vehicles.”
In the Discussion & Findings portion of the Order, the Advance Ruling Authority had found/ noted the following:-
“A close scrutiny of Section 17(5)(a) reveals that the term supply has been prefixed by the word further’ and due weightage should be given to the prefix. In essence the term further supply’ connotes resale which is not the purpose of the applicant behind purchasing demo cars. “
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The demo vehicles are not used for the purposes specified under Section 17(5)(a) i.e. for making taxable supplies, including further supply of such motor vehicles and are, therefore, not covered under exception provided under Section 17(5)(ab)(i).
These demo cars are also not covered under exception mentioned under Section 1 7(5)(ab)(ii). “
GROUNDS of APPEAL:
In their support, the applicant submitted the following as GROUNDS OF APPEAL:
