2024 (8) TMI 374

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....ules and Notifications issued there under shall include a reference to the corresponding provisions of the KSGST Act, Rules and the Notifications issued there under. 3. The question on which advance ruling is requested is mentioned above. 4. Contentions of the Applicant. 4.1. In the application, they stated, inter alia, that the applicant, as part of their day to day business, requires demo vehicles in the show rooms. Such demo vehicles are used for test drive to potential customers and which is essential to sales promotion. Such vehicles would be used for this purpose for 2 years or 40,000/- KM, whichever is earlier. These vehicles are capitalized in the books of accounts as fixed assets and depreciation is availed on the same und....

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....icles used for 'transportation of persons' whereas demo cars are used for demonstration of the vehicle to prospective customers. Further, Section 17 (5) does not hit the eligibility for ITC when the cars are used for further supply of such vehicles and the demo vehicles are also purchased for further supply of such vehicles, since they are sold after the demo period. On these grounds, they claimed that they are eligible for ITC in respect of the purchase of cars used for demo purpose and cited and quoted the decision of AAR, West Bengal in the application made by M/s Toplink Motor Car (P) Ltd and AAR, Maharashtra in Chowgule Industries (P) Ltd etc. They also stated that 'further supply of Motor Vehicles' does not prescribe a....

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....on are earmarked for demonstration purpose so that prospective customers can make an informed choice about purchasing the vehicle. Demo cars are thus indispensable for sales promotion since prospective customers prefer to test drive the cars before they make a decision. Hence, we have no dispute that the demo cars are put to use for furtherance of business and clears stipulations envisaged under Section 16 (1) of the CGST Act, 2017 for availing ITC. However, we find that Section 17 (5) is an overriding provision and is applicable 'Notwithstanding anything contained in sub-section (1) of section 16' and therefore, complying with the conditions under Section 16 (1) alone does not make the applicant eligible for ITC of the demo cars. ....