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Credit available on purchase of demo cars used for demonstration purpose: AAR
THE AUTHORITY FOR ADVANCE RULING UNDER GST, WEST BENGAL IN THE CASE OF LANDMARK CARS EAST PVT. LTD. , decided on 4-4-2024
👉 The AAR Judgement:-
✔️ Where assessee, an authorized agent of Mercedes Benz India, facilitates sales of Mercedes-Benz passenger vehicles, including electric cars where assessee purchase demo vehicles from Mercedes-Benz India to provide facilitation services and and thereafter supplies same which may be made at a price lower than purchase value of said vehicle, restriction under section 17(5)(a)(A) that on input tax credit for motor vehicles used for transportation of fewer than thirteen persons doesn’t apply to demo vehicles supplied after a specified time for test drives, therefore assessee is entitled to claim input tax credit on said demo vehicle purchases.
Section 17 of Central Goods and Services Tax Act, 2017
✔️ Demo vehicle used by assessee to provide trial runs and demonstrations to prospective customers would be classified under Chapters 8702 or 8703, as case may be and would be liable to tax at 28 percent GST.
Section 9 of Central Goods and Services Tax Act, 2017
✔️ As per circular No. 178/10/2022-GST dated 03.08.2022 amount received by assessee from Mercedes Benz India towards reimbursement of Loss on Sale of Demo Car shall be regarded as consideration received against supply of services of ‘agreeing to tolerate an act’ (SAC: 9997974) and would be taxable @ 18% vide serial number 35 of Notification No. 11/2017-Central Tax (Rate).
Section 9 of of Central Goods and Services Tax Act, 2017
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