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TMI Blog2018 (10) TMI 1873X X X X Extracts X X X X X X X X Extracts X X X X ..... th the relevant rule 43 of the CGST/HGST Rules. It is also worth noting that the specific provisions regarding admissibility of input tax credit on motor vehicles for transportation of persons upto a seating capacity of not more than 13 person are contained in section 17 (5) of the CGST/HGST Act 2017 - Since section 17 (5) of the HGST/CGST Act, 2017 starts with a non obstante clause, as per the law the admissibility of input tax credit on motor vehicles in the present case shall be as per the provisions contained therein. - HAR/HAAR/R/2018-19/17 - - - Dated:- 9-10-2018 - SANGEETA KARMAKAR AND VIJAY KUMAR SINGH MEMBER Present for the Applicant : Sh. R. Muralidharan, CA, Sh. Shankey Aggarwal, Advocate, Sh. Arun Gulati, Manager, Sh. Rahul Kumar, ETO. STATEMENT OF FACTS AS PER APPLICANT BMW India Pvt. Ltd. (hereinafter referred to as the BMW India / the Company ) is a group company of the BMW Group and is engaged in the manufacturing, trading selling of motor vehicles, spare parts, accessories and related services in India. The Company has various units, which are distinctively registered under the Goods and services Tax legislations. The current application ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... dealers of Company. As per the internal policy of the Company, these vehicles are generally meant to be used for a very limited period i.e. about 12 months for the specified purposes and thereafter, sold to the dealers. Such vehicles are capitalized in the books of accounts due to applicable accounting standard and Income tax laws requirements. 5. As per the internal guidelines of the Company, inter-alia, these vehicles are used for the following purposes: (i) Marketing fleet: Vehicles for undertaking various marketing promotional activities such as road shows, exhibitions etc. (ii) Sales Fleet: Vehicles assigned to corporate sales team for giving it to customers for test drive and product experience. (iii) Press Fleet: Vehicles provided to media houses/senior journalists for test purposes. (iv) Training Fleet: Vehicles for training of dealers and authorised service centre operators; (v) Personally Assigned Vehicles: These vehicles are assigned to employees and expats of the Company primarily for business purposes. (vi) Visitors Cars: These vehicles are in Gurgaon to service visitor transportation needs and business use of employees. In this is ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for sales promotion of the vehicles, and such activity is in course of and in furtherance of the business of the Company. 4 Training Fleet Vehicles for sales and aftersales trainings provided to employees of the Company as well as dealer staff; These vehicles received by the Applicant are also used for the purpose of training of authorized dealers who also run service centres. After sales support to customers is a crucial part of the business of the Applicant. With the help of these vehicles, Dealers and Authorized Service Centre Operators located at different places are trained about repair and maintenance of the vehicle, and after sale support services required for the customers. These training activities is thus vital for the business of the Applicant as without these trainings, the quality after sale support and end customer satisfaction cannot be ensured. Thus, these training activities are also intrinsically connected to the business of the Applicant. 7. Further, the Applicant in adherence to provision of Section 17(5) Of the CGST Act, 2017 is not availing any Input Tax Credit in relation to ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ] for supply of such old and used cars. The said Notification provides concessional tax on the margin between the consideration received for supply of such goods and the depreciated value of such goods on the date of supply. As per the terms of the said Notification, the Applicant is currently not availing any Cenvat Credit on these vehicles. On sale of old and used vehicles, appropriate GST is discharged in terms of the said Notification. [Sample copies of sale invoice issued by the Applicant to its dealers for sale of cars is enclosed as Exhibit-E ]. 11. in the aforesaid backdrop, the Applicant pray this Hon ble Authority to issue its ruling(s) on the following question: Whether the Applicant-unit is entitled to avail input tax credit of IGST and Compensation Cess paid on motor vehicles, mentioned in para 5 (i) to 5(iv) supra, which are received on stock-transfer, basis from one unit to another unit of the Company for limited use in relation to specified business activities and further supply to the authorised dealers? Question(s) on which advance ruling is required Whether the Applicant-unit is entitled to avail input tax credit of IGST and Compensation ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... is clear that in order to avail input tax credit on any goods or services, the same must be used or intended to be used in the course or in furtherance of business . Further, Section 16(2) of the CGST Act provides for certain procedural requirement such as having an original copy of tax invoice/debit notes in order to avail input tax credit. Section 16(3) of the CGST Act stipulates that the Company shall not claim the benefit of depreciation on the tax component of the cost of capital goods: (3) Where the registered person has claimed depreciation on the tax component of the cost of capital goods and plant and machinery under the provisions of the Income-tax Act, 1961, the input tax credit on the said tax component shall not be allowed. [Emphasis Supplied] 5. It is submitted that the Applicant fulfils the condition under Section 16(1) and also the Applicant will not be claiming any benefit of depreciation on the tax and cess component of the cost of goods. Thus, these provisions stand duly satisfied in the present case. 6. Further, Section 16(4) of the CGST Act provides the time limit to avail input tax credit. It is submitted that there the Applicant undertakes ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct of such motor vehicles, which are used for the aforesaid specified activities and further Supplied to dealers. Comment of the Officer under section 98 (1) of the CGST/HGST Act, 2017 13. The Deputy Excise Taxation Commissioner, Gurugram (EAST) being the jurisdictional officer had submitted his comments as required under section 98 (1) of the CGST/HGST Act, 2017 as under:- It has been submitted that the provisions of section 17 (5) (a) are applicable for availing ITC, which are re-produced below: 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 and other conveyances except when they are used-for making the following taxable supplies, namely:- further supply of such vehicles or conveyances; or Transportation of passengers; or Imparting training on driving, flying, navigating such vehicles or conveyances; for transportation of goods: In view of Section 17(5)(a) of GST Act the applicant-unit is not entitled to avail input tax credit of IGST and compensation cess paid on receipt of car ..... 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