Input tax credit on demo vehicles permitted when used to promote further supply, with limits for agent arrangements and depreciation. Demo vehicles used by authorised dealers to provide trial runs and demonstrate features promote sales and therefore qualify as being used for making further supply of such motor vehicles; accordingly, input tax credit on such demo vehicles is not blocked. Where demo vehicles are used for other purposes or where the dealer only provides marketing/agent services and does not make the supply on its own account, ITC is not available. If demo vehicles are capitalized they are treated as capital goods and ITC is permitted subject to the statutory depreciation limitation on the tax component and to adjustment on subsequent sale.
Cases where this provision is explicitly mentioned in the judgment/order text; may not be exhaustive. To view the complete list of cases mentioning this section, Click here.
Provisions expressly mentioned in the judgment/order text.
Input tax credit on demo vehicles permitted when used to promote further supply, with limits for agent arrangements and depreciation.
Demo vehicles used by authorised dealers to provide trial runs and demonstrate features promote sales and therefore qualify as being used for making further supply of such motor vehicles; accordingly, input tax credit on such demo vehicles is not blocked. Where demo vehicles are used for other purposes or where the dealer only provides marketing/agent services and does not make the supply on its own account, ITC is not available. If demo vehicles are capitalized they are treated as capital goods and ITC is permitted subject to the statutory depreciation limitation on the tax component and to adjustment on subsequent sale.
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