Lawstreet Journal

GST ITC Not Allowable to BMW On Demo Car Or Vehicle: AAAR

Lawstreet Journal 20 Mar 2022 1:23am

Image courtesy: Lawstreet Journal Business GST ITC Not Allowable to BMW On Demo Car Or Vehicle: AAAR

The Haryana Appellate Authority of Advance Ruling (AAAR) bench consisting of Amit Kumar Aggarwal and Anil Kumar Jain ruled that the Input Tax Credit (ITC) is not allowable on demo cars/vehicles.

BMW/Appellant has been registered in GST at Gurugram as a State administered taxpayer for running a training centre for the training of Engineers and Marketing professionals etc. They get BMW-branded vehicles made in the Chennai plant as inter-state stock transfers on which IGST and Compensation Cess have been paid, and use these vehicles for 'a very limited period of about 12 months'.

BMW has sought an advance ruling on the issue of whether the unit of BMW is entitled to avail the Input Tax Credit (ITC) of IGST and Compensation Cess paid on receipt of cars (on stock transfer basis) for use in relation to business activities and onwards supply to dealers after use for a limited period of time.

The Authority of Advance Ruling (AAR) ruled that in the motor vehicle industry, demonstration vehicles are an indispensable tool for the promotion of sales by providing trial runs to customers. These demo cars are used for demonstration purposes for prospective customers, and after a specific period of time, they are sold off for their book value, paying the applicable taxes at that point of time.

The AAR observed that the specific provisions regarding the admissibility of the input tax credit on motor vehicles for transportation of persons up to a seating capacity of not more than 13 persons are contained in Section 17(5) of… Continue Reading...

Tagged: BMW   GST  
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