TaxTMI 
TaxTMI 
Dear Sirs,
A scrap dealer has purchased a second-hand vehicle, rebuilt and hired. It is used to supply food articles, vegetables, milk and other daily consumables. Is he eligible for ITC on the purchase of the second-hand vehicle or blocked u/s 17?
ITC on second havd vehicle purchase
24 Sep 2024 
33 Replies 
4843 Views Asked by
Input Tax Credit eligibility on refurbished vehicle hinges on scrap classification versus treated motor vehicle, affecting credit entitlement.
Entitlement to Input Tax Credit on purchase of a second hand vehicle bought as scrap and refurbished turns on whether the goods remain 'scrap' used in the buyer's trade (creditable if properly invoiced and the buyer is a registered scrap dealer) or have become a roadworthy second hand motor vehicle (where credit may be restricted under the rule barring credit on certain motor vehicles). Classification under HSN, invoicing, purchaser's business, and valuation/margin scheme considerations determine the GST credit outcome. (AI Summary)
Entitlement to Input Tax Credit on purchase of a second hand vehicle bought as scrap and refurbished turns on whether the goods remain 'scrap' used in the buyer's trade (creditable if properly invoiced and the buyer is a registered scrap dealer) or have become a roadworthy second hand motor vehicle (where credit may be restricted under the rule barring credit on certain motor vehicles). Classification under HSN, invoicing, purchaser's business, and valuation/margin scheme considerations determine the GST credit outcome. (AI Summary)