9911796707
TMI Blog2024 (8) TMI 375X X X X Extracts X X X X X X X X Extracts X X X X ..... ide the additional services such as refurbishment of the vehicle and replacement of spares or body parts, if any, for scaling up the value of the vehicle which are required for subsequent sale. The applicant either uses their own service station or external service stations to repair and refurbish such used vehicles. Where a registered person who is engaged in the supply of buying and selling of second hand goods such as used motor vehicles without availing any credit of input tax on the taxes paid at the time of purchase of such goods i.e, used motor vehicles, the GST at the rate as specified in the aforementioned notification shall be payable by such registered person on the value of supply that represents the margin of the registered person. Further, both sub-rule (5) of rule 32 of the CGST Rules, 2017 as well as the notification referred in this ruling not mandating the non availment of credit of input tax on the taxes paid for receipt of goods or services other than the credit of input tax on the taxes paid at the time of purchase of used cars to get the benefits available under the said rule and notification. Eligibility of input tax credit of tax paid on purchase of spare pa ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ct, Rules and the Notifications issued thereunder. 3. The applicant requested advance ruling on the following: 3.1. In view of the Notification No. 8/2018-Central Tax (Rate) dated 25th January 2018 issued by the Department of Revenue, Ministry of Finance, Government of India, the applicant would like to get clarification as to whether the input tax credit would be available on inward supplies of goods or services which are in the nature of direct expenditures like spare purchases, repairs and refurbishment costs of vehicles, etc., except on purchase of old or used motor vehicles as mentioned in para 2 of the notification. 3.2. In view of the Notification No. 8/2018-Central Tax (Rate) dated 25th January 2018, the applicant would like to get clarification as to whether the input tax credit would be available on inward supplies of other goods or services except on purchase of old or used motor vehicles as mentioned in para 2 of the notification. That is, whether the credit of input tax is available on inward supplies of goods or services like office/ showroom rent, telephone, advertisement, professional charges, capital goods, etc., except that on inward supply of old or used motor ve ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d in clause (63) of section 2 of the CGST Act or CENVAT defined as per CENVAT credit Rules, 2004 or input tax credit of VAT or any other taxes paid on such goods. The applicant submits that the word such goods means the old or used vehicles in their case and restricts ITC by the Notification only on the availment of inward supply of the same from any registered persons. Thus there is no restriction on utilizing ITC from other inward supplies such as spares, repairs, refurbishment costs, rent, telephone, advertisement, professional services, capital goods, etc. 4.7. Finally the applicant concludes that as per Notification No. 08/2018-CT (Rate), dated 25.01.2018 read with sub Rule (5) of Rule 32 of CGST Rule, 2017, the input tax credit is not available on the inward supply of old or used vehicles for its further supply and there is no restriction in utilizing ITC on the tax paid on other inward supplies such as repair and refurbishment of vehicle, rent, spare purchases, advertisement, professional charges, other office requirements like telephone, capital goods, etc. Also there is no restriction in utilizing the credit so availed for the payment of tax as per the said Notification. 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... under the provisions of this Act and admissibility of input tax credit of tax paid or deemed to have been paid and therefore admitted the application on merits. 7.2. The applicant is a regular taxpayer registered under the CGST/KSGST Act, engaged in the business of buying and selling of second hand goods such as old used luxury cars. When a used car is purchased from a customer, initially the applicant evaluates both external and internal condition of the vehicle by using both technology as well as the service of technically qualified persons. Then they decide the additional services such as refurbishment of the vehicle and replacement of spares or body parts, if any, for scaling up the value of the vehicle which are required for subsequent sale. The applicant either uses their own service station or external service stations to repair and refurbish such used vehicles. 7.3. The applicant has submitted that for its transactions (buying and selling of second hand cars) it applies GST as per Notification No.08/2018-CT (Rate), dated: 25.01.2018 of the Department of Revenue, Ministry of Finance, Govt, of India. The said notification is reproduced under; In exercise of the powers conferr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , it shall be ignored; and (ii) in any other case, the value that represents the margin of supplier shall be, the difference between the selling price and the purchase price and where such margin is negative, it shall be ignored. 2. This notification shall not apply, if the supplier of such goods has availed input tax credit as defined in clause (63) of section 2 of the CGST Act, 2017, CENVAT as defined in CENVAT Credit Rules, 2004 or the input tax credit of value added tax or any other taxes paid on such goods. 7.4. Sub-rule (5) of rule 32 of CGST Rule, 2017 provides the determination of value of supply in buying and selling of second hand goods. The same is reproduced below; where a taxable supply is provided by a person dealing in buying and selling of second hand goods, ie; 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 difference between the selling price and the purchase price and where the value of such supply is negative, it shall be ignored. 7.5. As per Para 2 of the notification referred in this ruling, it is clari ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... and in the manner specified in section 49 of the CGST Act, a registered person is entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of business. 7.9. Hence, for the purpose of determining the eligibility of input tax credit, we have further verified the conditions and restrictions prescribed in the prevailing Act and rules. The conditions for availment of credit of input tax charged on any supply of goods or services or both are prescribed in subsection (2) to sub-section (4) of section 16 of the CGST Act. Further, section 17 of the CGST Act provides restrictions and blocking of input tax credit for certain supplies on which tax has been charged. Neither sections 16 and 17 of the Act nor the notification No. 08/2018-CT (Rate) dt 25.01.2018 restricts the eligibility of input tax credit of tax paid on direct and indirect expenses incurred in the business of second hand sales of luxury cars engaged by the applicant. 7.10. Hence, it appears that the applicant would be eligible to claim input tax credit of tax paid on both direct and indirect expenses such as repairs and refur ..... X X X X Extracts X X X X X X X X Extracts X X X X
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