Input Tax Credit entitlement: prohibition in the used-vehicle notification is confined to the listed goods, ITC on other inputs allowed.

Notification No. 08/2018-Central Tax (Rate) restricts input tax credit (ITC) only in relation to the used motor vehicles specified in the notification; the referential phrase limiting prohibition applies to those goods alone. Statutory ITC eligibility and exclusions under the CGST framework remain applicable to other inward supplies. Consequently, ITC on ancillary services and capital goods (refurbishment, marketing, professional fees, housekeeping, rent, software, staffing, administrative overheads, etc.) is available provided the conditions for entitlement in the CGST Act and relevant Rules are satisfied.

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Issues: Whether a registered supplier availing benefit under Notification No. 08/2018-Central Tax (Rate) as amended can claim input tax credit on inward supplies other than the used motor vehicles covered by the notification, including refurbishment services, marketing and advertising services, professional fees, housekeeping and security services, rent, office expenses, software subscriptions, manpower recruitment and staffing services, administrative overheads and capital goods.

Analysis: Notification No. 08/2018-Central Tax (Rate) applies specifically to the supply of the used motor vehicles described in the Table of the notification and para 2 of the notification bars the notification where the supplier has availed input tax credit on "such goods". The referential phrase "such goods" must be read as confined to the goods listed in the notification. Sections 16 and 17(5) of the Central Goods and Services Tax Act, 2017 set out eligibility and specified exclusions for input tax credit; none of the exclusions in Section 17(5) extend to the ancillary input services and capital goods listed by the applicant. Rule 32(5) and the special rate scheme govern valuation and tax on margin for notified second hand goods but do not by their language prohibit claiming ITC on separate inward supplies that qualify under Sections 16 to 21 and Rules 36 to 45 of the CGST Rules, 2017. Applying principles of literal and referential interpretation, the prohibition in the notification is limited to ITC on the notified used motor vehicles themselves and does not operate to deny ITC on other inputs or input services incurred in the course or furtherance of the business, subject to statutory conditions for entitlement.

Conclusion: The applicant is eligible to avail input tax credit on inward supplies other than the used motor vehicles covered by Notification No. 08/2018-Central Tax (Rate), including refurbishment and repair services, marketing and advertising services, professional and consultancy fees, housekeeping and security services, rent, office expenses, software subscriptions, manpower recruitment and staffing services, other administrative services, and capital goods, subject to fulfillment of conditions in Sections 16 to 21 of the Central Goods and Services Tax Act, 2017 and Rules 36 to 45 of the Central Goods and Services Tax Rules, 2017.

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