In Re: M/s. A.M. Motors.
GST
2018 (10) TMI 514 – AUTHORITY FOR ADVANCE RULINGS, KERALA – 2018 (18) G. S. T. L. 93 (A. A. R. – GST)
AUTHORITY FOR ADVANCE RULINGS, KERALA – AAR
Dated:- 26-9-2018
AAR No. KER/10/2018
GST
SHRI. B.G. KRISHNAN AND SHRI. B.S. THYAGARAJABABU MEMBER
Authorized Representative: Adv. Harisankar. V. Menon
In the motor vehicle industry, demonstration vehicle is an indispensable tool for promotion of sales by providing trial run to customers. It is a business requirement that motor car dealer shall compulsorily acquire the demonstration vehicles from principal supplier. These purchases are capitalized in the books of accounts excluding tax components. These demo cars are used for demonstration purpo
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ears or 40,000 kms. whichever is earlier.
As per Section 16(1) of the GST Act, every registered person shall be entitled to take credit of input tax charged on any supply of goods or services or both which are used or intended to be used in the course or furtherance of his business. The petitioner purchases the vehicles from the supplier against tax invoices, after paying taxes.
The demo cars purchased from supplier are being capitalized. The capital goods which are used in the course or furtherance of business, is entitled for input tax credit. As per Section 2(19), 'capital goods' means goods, the value of which is capitalized in the books of accounts of the person claiming the input tax credit and which are used or intended to
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ly and the applicant is entitled for input tax credit as against demo cars.
The issue was examined in detail. The suppliers of vehicles supplied demo cars against tax invoices. The demo car is an indispensable tool for promotion of sales by providing trial run to customers and to understand the features of the vehicle. The applicant capitalizes the purchase in the books of accounts. The capital goods which are used in the course or furtherance of business, is entitled for input tax credit. As the impugned purchase of demo car is in furtherance of business, the applicant is eligible for input tax credit. Furthermore, this activity does not come under the negative clause, as after a limited period of use as demo car, the vehicles are s
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