ITC is Allowed on GST Paid on Inward Supply of Cars Which are Used for Demonstration Purpose | AAR

Case Details: Landmark Cars East (P.) Ltd. v. Union of India - [2024] 162 taxmann.com 318 (AAR-WEST BENGAL)

Judiciary and Counsel Details

• • Tanisha Dutta & Joyjit Banik, Members
  • Nitesh Jain for the Appellant.

Facts of the Case

The applicant is an authorized agent of Mercedes Benz India and is responsible for facilitating the sales of Mercedes-Benz passenger vehicles, including electric cars. It entered into an agreement with Mercedes Benz India where applicant would purchase demo vehicles from Mercedes-Benz India to provide facilitation services to Mercedes-Benz India. It filed an application for advance ruling to determine whether it would be eligible to claim input tax credit on purchase of demo vehicles.

AAR Held

The Authority for Advance Ruling observed that the applicant would maintain stock of demo vehicles for a specified period of time to provide trial runs and demonstrations to prospective customers and thereafter supply the same. The restriction of input tax credit as imposed in Section 17(5)(a)(A) of GST Act is not applicable on purchase of demo vehicles.

However, the provisions of GST Act nowhere specifies that input tax credit shall not be available in respect of any outward supplies which is made at a price lower than its procurement value. Therefore, it was held that the applicant would be eligible to claim input tax credit on purchase of demo vehicles.

List of Cases Reviewed

• • Fazaladdin Mandal v. Panchanan Das (AIR 1957, CAL 92)(Para 4.14) followed.
  • Toplink Motorcar (P.) Ltd (Para 4.2) distinguished.