Authorized dealer of motor vehicle company is eligible to avail ITC on demo vehicles: AAR

Case Details: Authority for Advance Rulings, West Bengal Toplink Motorcar (P.) Ltd., In re - [2022] 140 taxmann.com 161 (AAR-WEST BENGAL)

Judiciary and Counsel Details

• • Brajesh Kumar Singh & Joyjit Banik, Member
  • Jay Krishna Sharma & Mayur Khaitan, Authorised Representatives for the Applicant.

Facts of the Case

The applicant was an authorized dealer of motor vehicle company. It filed an application to determine whether input tax credit would be allowed on purchase of vehicles which would be used for demonstration/test drive purposes.

AAR Held

The Authority for Advance Ruling observed that the provisions of GST laws nowhere specify that input tax credit shall not be available if any outward supply is made at lower price than its procurement value. The demo vehicles after a specified period of time would be supplied at price lower than purchase value of said vehicle. Therefore, the applicant would be eligible to avail input tax credit on purchases of demo vehicles which can be set off against output tax payable under GST.