In re Toplink Motorcar Private Limited (GST AAR West Bengal)
The applicant is an authorized dealer of Hyundai Motor India Limited for supply of different ranges of motor vehicles & also carries on business activities as an authorized service station. He purchases vehicles against tax invoices which are reflected in his books of accounts as capital assets and are used as demo cars for providing trial run to the customers to make them understand the features of the vehicles.
Following are the rulings in respect of the queries before the WBAAR:
i. Whether GST liability on sale of vehicle, spares, labour can be set-off by utilizing the ITC on purchase of demo vehicle, other expenses like repairs & maintenance, insurance etc. ?
√ ITC on motor vehicles used for transportation of persons having approved seating capacity of not more than thirteen persons (including the driver) can be availed only when such motor vehicles are (i) supplied further, or (ii) used for transportation of passengers, or (iii) used for imparting training on driving such motor vehicles.
√ The standard business practice of a car dealer is to purchase vehicles including one or more demo vehicles for further supply of such vehicles. While non-demo vehicles are made available for sale immediately after the purchase, the demo vehicles are put up for sale after the demonstration/test drive period. The demo vehicles are purchased all along for further supply with the condition that they will be kept for a specific period of time. Purchase of demo vehicles & further supply of the same satisfies the conditions laid down in section 17(5)(a)(A) of the GST Act.
√ The applicant is eligible to avail ITC on purchases of demo vehicles which can be set off against output tax payable under GST
FULL TEXT OF THE ORDER OF AUTHORITY FOR ADVANCE RULING,WEST BENGAL
1.1 At the outset, we would like to make it clear that the provisions of the Central Goods and Services Tax Act, 2017 (the CGST Act, for short) and the West Bengal Goods and Services Tax Act, 2017 (the WBGST Act, for short) have the same provisions in like matter except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the WBGST Act. Further to the earlier, henceforth for the purposes of these proceedings, the expression GST Act’ would mean the CGST Act and the WBGST Act both.
1.2 The applicant is an authorized dealer of Hyundai Motor India Limited for supply of different ranges of motor vehicles and also carries on business activities as an authorized service station. It is submitted by the applicant that he purchases vehicles against tax invoices which are reflected in his books of accounts as capital assets and are used as demo cars for providing trial run to the customers to make them understand the features of the vehicles.
1.3 The applicant has made this application under sub section (1) of section 97 of the GST Act and the rules made there under seeking an advance ruling in respect of following questions:-
