9911796707
TMI Blog2018 (10) TMI 1873X X X X Extracts X X X X X X X X Extracts X X X X ..... ABCB7140C1ZC) wherein different models of BMW vehicles (BMW 3, 5, .7 Series, XI, X3, 3GT, 6GT, X5 models and MINI) are produced using domestically procured parts as well as parts imported from BMW Group Companies. Apart from the plant in Chennai, the Company has also established a warehouse in Mumbai for distribution of parts across India (GSTIN No. 27AABCB7140C1Z5) and a corporate office as well as a training centre in Gurgaon. BMW vehicles and parts are distributed in India through dealer network spread across major metropolitan centers of the country. Stock Transfer of vehicles to the Applicant Unit 3. The above-mentioned motor vehicles are manufactured in India by the Chennai Unit of the Company. Apart from selling vehicles directly to dealers, Chennai unit of the Company also stock transfers a few vehicles manufactured at the Chennai plant to the Gurgaon unit i.e. the present Applicant. The Company understands that its different units are deemed as different persons for the purposes of the GST legislations (in terms of Section 25(4) of CGST Act). We therefore understand that the said inter-state stock transfer is subject to levy of Integrated Goods and Services Tax ('IGST') ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ') and detailed nature & use of these fleet cars is explained hereunder: Sr.No. Fleet type Nature of the fleet 1 Marketing fleet Vehicles for undertaking various marketing & promotional activities such as road shows, exhibitions etc. These vehicles received by the Applicant are mainly used for sales promotion and marketing activities. These vehicles are displayed at various road shows, trade fares and exhibitions, which increases the presence and visibility of the BMW Brand vehicles. Road shows and exhibitions play an important part to increase the sales of the vehicles to the consumers. Hence, the said activity is integrally connected to the business of the Applicant and qualifies as an activity, which is in course of and in furtherance of business. 2 Sales Fleet Vehicles assigned to corporate sales team for giving it to customers for test drive and product experience. Sales fleet vehicles are vehicles assigned to corporate sales team who further gives it to customers for test drive, events and product experience. Any customer before purchasing a vehicle prefers to test drive the car to understand the look and feel of the car. Similar to marketing fleet, these cars play ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ot allow re-assigning of the vehicles or usage of vehicles for any other purpose at the later stage. For example, a vehicle once assigned for press fleet cannot be used or reassigned for marketing & promotional activities and vice versa. [Copies of vehicle order form and handover form is collectively enclosed as Exhibit-D] 9. At the time of Stock transfer itself, the intention of the Applicant is to further sell the vehicles to dealers after limited use. Accordingly, the Company's policy provides that these vehicles are to be used for a limited period and only for the specified purposes. As per the said policy and established practice of the Company, such vehicles are only meant to be generally used for a period of about 12 months from the date of receipt of the vehicles [refer para 3.10 of Exhibit C]. Thereafter, the vehicles are to be sold by the Company to authorised dealers. The process of further sale of vehicle from BMW India to dealers may take some time [upto 18 months from the date of use of vehicle] depending on demand of the vehicles. From the above, it is clear that the Company always intended to sell the vehicles to dealers after being used for a very limited period. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ve 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. Conditions for availing Input tax credit as per CGST Act and Haryana SGST Act 2. It is submitted that both the IGST Act and Compensation Act provide for entitlement of input tax credit of IGST and Compensation Cess respectively. Section 20 of the IGST Act provides for application of the provisions of the CGST Act in so far as they inter alia relate to "input tax credit". Similarly, Section 11 of the Compensation Act provides for application of provisions of the CGST Act / IGST Act in so far as they inter alia relate to "input tax credit". Thus, one is required to traverse the provisions of the CGST Act to determine eligibility for availing input tax credit of IGST and Compensation Cess. 3. Section 16 of the CGST Act provides the eligibility and conditions for taking input tax credit. Relevant part of the said provision is extracted below: 16. Eligibility and conditions for taking input tax credit.- (1) Every registered person shall, subject to such Conditions an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... vehicles or conveyances: or (B) transportation of passengers; or - (C) imparting training on driving, flying, navigating such vehicles or conveyances; (ii) for transportation of goods; [Emphasis Supplied] 8. A combined reading of the aforesaid provisions provide that the following substantive conditions must be satisfied by the present Applicant in order to be eligible for availing the input tax credit in respect of such 'motor vehicles': (i) Goods must be used or intended to be used in the course or in furtherance of business. (ii) The goods must be further used in making specified taxable supplies under Section 17(5)(a) of CGST Act. , 9. In the present case, it is submitted that both the aforesaid conditions have been satisfied by the Applicant as explained below. It is also pertinent to point out that the HGST Act also provides similar to the provisions of the CGST Act without any deviation. Thus once the provisions of the CGST Act in respect of the entitlement of input tax credit stand satisfied, the provisions of the HGST Act will also be considered satisfied and thus input tax credit can be availed in terms of the HGST Act as well. 10. ln view of the above, the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of time. 16. During discussions it has been shown to the authority that these demo cars are received by the applicant against tax invoices and are reflected in their books as capital assets. The general provisions for availing input tax credit on capital goods which are used or intended to be used in the course or furtherance of business are contained in section 16 (1) and section 18 (1) of the CGST/HGST Act, 2017 read with the relevant rule 43 of the CGST/HGST Rules. 17. 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. 18. 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. Advance ruling under section 98 of the CGST/HGST Act 2017 In the backdrop of above discussions and findings the advance ruling on the questions is pronounced as under: - Question: Whether the Applicant-unit is entitled to avail input ..... X X X X Extracts X X X X X X X X Extracts X X X X
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