TaxTMI 
TaxTMI 
2023 (8) TMI 392
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....n reference to both CGST Act and TGST Act. 3. It is observed that the queries raised by the applicant fall within the ambit of Section 97 of the GST ACT. The Applicant enclosed copies of challans as proof of payment of Rs. 5,000/- for SGST and Rs. 5,000/- for CGST towards the fee for Advance Ruling. The Applicant has declared that the questions raised in the application have neither been decided by nor are pending before any authority under any provisions of the GST Act. The application is therefore, admitted. 4. BRIEF FACTS OF THE CASE: Statement of relevant facts as per the applicant having a bearing on the question(s) on which Advance Ruling is required is reproduced below- The Applicant M/s. Sai Service Pvt Limited is a private limited company, is registered under Central Goods and Services Tax Act, 2017 (hereinafter referred to as 'CGST Act') in the state of Telangana vide GSTIN 36AABCS4998M1ZK and is also registered in other states. The Applicant is an authorized car dealer for MSIL for supply of four-wheeler vehicles, spares and for servicing of vehicles The Applicant is engaged in the business of supply of automobiles having dealerships of MSIL, Bajaj....
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.... is determined on the margin method i.e. in case of registered persons who has claimed depreciation under Section 32 of the Income Tax Act,1961 on the said goods, the value that represents the margin of the supplier shall be difference between the consideration received for the supply of such goods and the depreciated value of such goods on the date of supply. The Applicant intends to avail the ITC on the procurement of such vehicles used for demonstration purposes and will not be availing the benefit under the above-mentioned notification at the time of sale of such vehicles i.e., the applicant will pay the applicable taxes on sale value at the point of sale. Hence this application. 5. QUESTIONS RAISED: Q1. Whether the applicant is entitled to avail the input tax credit charged on inward supply of motor vehicle which are used for demonstration purpose in the course of business of supply of motor vehicle as input tax credit on capital goods? 6. APPLICANT'S INTERPRETATION OF THE LAW The Applicant procures the motor vehicles used for the purpose of demonstration from MSIL against a tax invoice which are capitalized in the books of accounts of the Applicant as capital g....
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....nd Services Tax Act; or (e) the tax payable under the provisions of sub-sections (3) and (4) of section 7 of the Union Territory Goods and Services Tax Act, but does not include the tax paid under the composition levy; (17) "Business" includes - (a) any trade, commerce, manufacture, profession, vocation, adventure, wager or any other similar activity, whether or not it is for a pecuniary benefit; (b) any activity or transaction in connection with or incidental or ancillary to sub-clause (a); (c) any activity or transaction in the nature of sub-clause (a), whether or not there is volume, frequency, continuity or regularity of such transaction; (d) supply or acquisition of goods including capital goods and services in connection with commencement or closure of business; (e) provision by a club, association, society, or any such body (for a subscription or any other consideration) of the facilities or benefits to its members; (f) admission, for a consideration, of persons to any premises; (g) services supplied by a person as the holder of an office which has been accepted by him in the course or furtheran....
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....r is an essential activity to enhance, advance sales, continue business etc. hence it is in the course of furtherance of business. Accordingly, the said condition is also fulfilled. At the outset, the Applicant puts credence upon the interpretation of the above legal provision and submits that as per Section 16(1) of the CGST Act, the applicant who purchases these demo cars for use in test drives for customers and with an intention of further sale within limited period shall be eligible to avail credit of input tax charged, as these are used in the course or furtherance of his business. 7. PERSONAL HEARING: The Authorized representatives of the unit namely Gowni Hanuma Reddy, CA , DGM Accounts & Finance, Nitin Vijaivergia, CA from PW & Co LLP, Adarsh shetty, CA from PW & Co LLP, T.Y. Thok, CA, N.D. Bhandary, Senior General Manager, Vikas Agarwal, CA from PW & Co LLP attended the personal hearing held on 24.01.2023. The authorized representatives reiterated their averments in the application submitted: 1. The Authorised Representative reiterated the contentions already submitted along with the application. 2. Further, the Authorised Representative/Applicant M/s. Ramin....
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....d has used them as test drive vehicles and disposed them after (2) years. The applicant is purchasing certain Motor vehicles from their suppliers Maruthi Suzuki Industries Limited (MSIL), Bajaj, KDM and Chetak Technology Limited. As per dealership norms with MSIL the applicant is eligible to purchase (2) vehicles per each model for the purpose of test drive vehicles used in their showroom. The sales policy issued by MSIL (SPB No.635, dt. 05.09.2010) stipulates the following norms for purchase and resale of these test drive vehicles: a) The test drive vehicles will be registered in the name of the company or dealership and the vehicle will be registered in the name of Director / Partner / Owner wherever corporate tax is higher than the individual tax on the registration of vehicle. b) The test drive vehicle may be retained by the dealership for (2) years or upto the usage of 40,000 Kms whichever is higher. If, the condition of the vehicle deteriorates before (2) years or 40,000 Kms of running then a new vehicle can be purchased on approval from the concerned Regional Manager. c) The Regional Office of MSIL will authenticate the vehicle as test drive veh....
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....cted to certain exceptions based on the purpose of usage. The relevant part of Section 17(5) of the CGST Act, 2017 is abstracted here under: Notwithstanding anything contained in sub-section (1) of section 16 and sub-section (1) of section 18, input tax credit shall not be available in respect of the following, namely:- (a) motor vehicles for transportation of persons having approved seating capacity of not more than thirteen persons (including the driver), except when they are used for making the following taxable supplies, namely:- (A) further supply of such motor vehicles; or (B) transportation of passengers; or (C) imparting training on driving such motor vehicles; The above Sec 17(5) of the CGST Act, 2017 makes a general rule that the purchase of motor vehicles for transportation of persons is not eligible to claim Input Tax Credit(ITC) by such purchaser. However as seen from the abstracted Section above, it introduces (3) exceptions to this rule. Justice G.P Singh in his book 'Principles of statutory interpretation' defines an exception as follows: "Exception is intended to restrain the enacting clause to particular cases"....