TaxTMI 
TaxTMI 
2025 (1) TMI 616
X X X X Extracts X X X X
X X X X Extracts X X X X
.... suppression of material facts or misrepresentation of facts, shall render such ruling to be void ab initio in accordance with Section 104 of the Act. At the outset, we would like to make it clear that the provisions of both the Central Goods and Services Tax Act and the Tamil Nadu Goods and Services Tax Act are in pari materia and have the same provisions in like matters and differ from each other only on few specific provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Services Tax Act, 2017 would also mean a reference to the same provisions under the Tamil Nadu Goods and Services Tax Act, 2017. 2. M/s A2Mac1(India) Private Limited (hereinafter 'the Applicant') submitted a copy of challan CIN-HDFC23093300396513 dated 25-09-2023 evidencing payment of application fees of Rs. 5,000/- each under sub-rule (1) of Rule 104 of CGST Rules 2017 and SGST Rules 2017. The online application form for advance ruling dated 4^th Oct, 2023 was physically received on 15-11-2023 as mandated under Rule 107A. 3. STATEMENT OF RELVANT FACTS AS NARRATED BY THE APPLICANT: • M/s A2Macl (India) Private ....
X X X X Extracts X X X X
X X X X Extracts X X X X
..... Copies of sample invoice and undertaking provided by the Applicant to the vehicle supplier in relation to temporary registration is furnished. • The applicant furnished a detailed process flow of the activities undertaken by them connected to vehicle dynamic benchmarking process with relevant images. • The cost of the vehicle bought and used for automotive benchmarking process are expensed out in the books. Further, at the end of specific/vehicle retention period, they are sold and the Applicant is of the view that it is an activity of 'supply' in the course of its business and discharges applicable GST on such transactions. • The Applicant submits that the issue for consideration is the admissibility of the input tax credit of tax paid on the purchase of new vehicles/cars. As the applicant is providing taxable service using vehicles/cars for research purposes, the purchase of vehicles/cars are integral part of the business model. The cost of purchase of vehicles/cars are predominant to the business without it the main revenue stream of the Applicant i.e, supply of services via platform subscription would fail. • The App....
X X X X Extracts X X X X
X X X X Extracts X X X X
....retention period the cars are sold by paying the applicable taxes/GST. • Motor vehicles purchased are only for research purposes and kept for a specific period of time before selling. As the purchase of motor vehicle and further supply satisfies the conditions laid down in Section 17 (5) (a) (A) of the Act and hence the applicant is eligible to avail input tax credit on purchases of motor vehicles which can be set-off against output tax payable under GST. • The applicant submitted that the term 'further supply' has not been defined in the GST Act and therefore one has to go by the definition of 'supply' which is the very plinth of GST law. The term 'further' prefixed to 'supply' is merely in the form of an adverb and does not differentiate it from 'supply' in any way. Thus, it makes the applicant eligible for availment of input tax credit on motor vehicles for the tax paid by them while acquiring the said vehicle. • The applicant relied upon the findings of AAR, Kerala in the case of M/s. A.M. Motors, wherein, while analyzing the issue that whether ITC on motor car purchased for demonstration purpose of ....
X X X X Extracts X X X X
X X X X Extracts X X X X
....r HSN (998331)-Engineering Advisory Services and Consulting Engineer. Their business activity is to purchase automobiles, make detailed study of the vehicle, adding their automotive research. They share their knowledge to the customers regarding the automobile purchased. Applicant has placed reliance on Advance Rulings from various states in support of their contention. The said ruling are related to purchasing of vehicles which are used as demo vehicles, vehicles used for rental/leasing purposes. • In the applicant's case, they share their knowledge acquired by studying the automobiles as service which is different from the citations presented by them. • Hence, ITC is not admissible for the applicant and informed that there is no proceedings pending before them. 6. COMMENTS OFFERED BY AC, MM NAGAR DIVISION, CHENNAI OUTER, CGST • Reproducing the relevant portion of Section 17 (5) of the CGST Act, 2017, the jurisdictional officer stated that the applicant is not eligible to avail ITC on purchase of motor vehicle, since they are not engaged in same line of business. The applicant is engaged in providing collaborative bench marking service....
X X X X Extracts X X X X
X X X X Extracts X X X X
....9;temporarily registered' with the RTO and used wholly and exclusively for automotive research purposes, carried out in their own factory. The cost of vehicles bought and used for automotive benchmarking process are expensed in their books. At the end of retention period (mostly 14 to 20 months), these cars are assembled again and sold to secondary market on payment of applicable GST on the transaction value. 8.2. With the above facts of the case, the applicant has filed an Advance ruling application seeking ruling on the following query. Query 1 Whether input tax credit can be claimed on the purchase of motor vehicles in terms of exception provided under Section 17 (5) (a) of Central/Tamilnadu Goods and Services Act, 2017. 9.1 Input Tax Credit (ITC) on inputs and input services is a facility provided by the Government to avoid cascading effect of tax on tax. Chapter-V of the CGST/TNGST Act, 2017 deals with the 'Input Tax Credit' where the conditions, eligibility, apportionment, reversal and ineligibility were provided with explanations. Hence purchases made for business purposes plays a crucial role in reducing the overall tax burden. Section 16 of the A....
X X X X Extracts X X X X
X X X X Extracts X X X X
....of such activities or transactions..................] (4) A banking company or a financial institution..............: Provided that the option once exercised shall not be withdrawn: Provided further that the restriction of fifty per cent shall not apply. (5) 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;¹ (aa) vessels and aircraft except when they are used- ............ ............ 9.3 Further, the definition of 'Motor Vehicle' is provided under Section 2 (76), of CGST/TNGST Act, 2017, wherein, 'Motor vehicle' shall have the same meaning as assigned to it in clause (28)....
X X X X Extracts X X X X
X X X X Extracts X X X X
.... who sells the motor vehicles after purchasing from manufacturers or any person acting as an agent to the manufacturer without buying it. Thus, the Board clarified that the Input Tax Credit on the purchase of demo-vehicles by a dealer is very much available as it is falling within the scope of 'further supply of such motor vehicles'. The intention of the Government to specifically include this supply of service implies that the input tax credit shall not be available to other motor vehicles not used for the intended purpose. The exclusion from input tax credit availment is given to all other motor vehicle even if it is used for any activity relating to business. Any other outward supplies using the motor vehicle for transportation of persons (having approved seating capacity of not more than 13 persons) are not eligible to claim input tax credit on such motor vehicle. 12. By providing an exception to the exclusion for availability of Input Tax Credit, the law is very clear and specific that except for the exceptions provided as sub-clause (A), (B) and (C), the input tax credit on the purchase of vehicles irrespective of any kind of outward supplies shall not be eligible.....
X X X X Extracts X X X X
X X X X Extracts X X X X
....d, they have not disclosed how the transaction value is arrived for discharging the tax. 16. During the personal hearing, the authorized representative have submitted that motor vehicle after the retention period are assembled again and sold to secondary market on applicable GST. Accordingly, if it is construed that the motor vehicle is sold as an 'old & used motor vehicle' under 'second sales', any person who is supplying such goods can claim the facility of the Notification No. 08/2018-CT(Rate) dated 25^th Jan, 2018, wherein the rate of tax has been prescribed for various categories of motor vehicles which are 'old and used motor vehicle'. However, this facility is not available if the supplier has availed input tax credit as defined in clause (63) of Section 2 of the Act. Further, in Chapter-IV of Determination of value of supply', Rule 32 (5) of the CGST Rules, 2017 prescribes valuation to be adopted for supply of second hand goods, i.e used goods as such or after such minor processing which does not change the nature of the goods and where no input tax credit has been availed on the purchase of such goods, the value of supply shall be the differe....