Input tax credit on demo vehicles allowed when used to promote further supply; blocked for staff transport or agency cases. Demo vehicles used by authorised dealers to provide trial runs and demonstrate features promote sale of similar motor vehicles and therefore constitute use for 'further supply of such motor vehicles,' so ITC on those demo vehicles is not blocked under clause (a) of section 17(5). If such vehicles are used for staff transport or where the dealer acts only as a marketing agent and does not supply the vehicle on his own account, ITC remains blocked. Capitalisation does not bar ITC, but claiming depreciation on the tax component disallows ITC on that component and disposal of capitalised demo vehicles attracts output tax adjustments.
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 allowed when used to promote further supply; blocked for staff transport or agency cases.
Demo vehicles used by authorised dealers to provide trial runs and demonstrate features promote sale of similar motor vehicles and therefore constitute use for "further supply of such motor vehicles," so ITC on those demo vehicles is not blocked under clause (a) of section 17(5). If such vehicles are used for staff transport or where the dealer acts only as a marketing agent and does not supply the vehicle on his own account, ITC remains blocked. Capitalisation does not bar ITC, but claiming depreciation on the tax component disallows ITC on that component and disposal of capitalised demo vehicles attracts output tax adjustments.
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