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TMI BlogClarification on availability of input tax credit in respect of demo vehiclesX X X X Extracts X X X X X X X X Extracts X X X X ..... nistry of Finance, Government of India, New Delhi has issued the above referred Circular. For the uniformity in implementation and in exercise of the powers conferred under Section 168 of the Goa Goods and Services Tax Act, 2017 (Goa Act 4 of 2017) it is hereby directed that the Said Circular issued by the GST Policy Wing, Central Board of Indirect Taxes and Customs, Department of Revenue, Ministry of Finance, Government of India shall be applicable, mutatis mutandis, in implementation of the Goa Goods and Services Tax Act, 2017 (Goa Act 4 of 2017). A copy of the above referred circular is attached herewith as Annexure. Difficulty, if any, in implementation of this circular may please be brought to the notice of the undersigned. Given under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . Availability of input tax credit on demo vehicles, which are motor vehicles for transportation of passengers having approved seating capacity of not more than 13 persons (including the driver), in terms of clause(a) of section 17(5) of Central Goods Services Tax Act, 2017 (hereinafter referred to as the CGST Act ). ii. Availability of input tax credit on demo vehicles in cases where such vehicles are capitalized in the books of account by the authorized dealers. 3. In order to ensure uniformity in the implementation of the provisions of law across the field formations, the Board, in exercise of its powers conferred by section 168 (1) of the CGST Act, hereby clarifies the above issues as below. 4. Availability of input tax credit on demo v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e used by authorized dealers to provide trial run and to demonstrate features of the vehicle to potential buyers, it is quite apparent that demo vehicles cannot be said to be used by the authorized dealer for providing taxable supply of transportation of passengers or imparting training on driving such motor vehicles. Therefore, demo vehicles are not covered in the exclusions specified in sub-clauses (B) and (C) of clause (a) of section 17(5) of CGST Act. Accordingly, it is to be seen whether or not the Demo vehicles in question can be said to be used for making further supply of such motor vehicles , as specified in the sub-clause (A) of the clause (a) of section 17(5) of CGST Act. 4.4 Regarding the provision for blockage of input tax cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... cles, say for transportation of its staff employees/ management etc. In such cases, the same cannot be said to be used for making further supply of such motor vehicles and therefore, input tax credit in respect of such motor vehicles would not be excluded from blockage in terms of sub-clause (A) of clause (a) of section 17(5) of CGST Act. 4.6 Further, there may be cases where the authorized dealer merely acts as an agent or service provider to the vehicle manufacturer for providing marketing service, including providing facility of vehicle test drive to the potential customers of the vehicle on behalf of the manufacturer and is not directly involved in purchase and sale of the vehicles. In such cases, the sale invoice for the vehicle is dir ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ods has been defined in section 2(52) of CGST Act, as, goods means every kind of movable property other than money and securities but includes actionable claim, growing crops, grass and things attached to or forming part of the land which are agreed to be severed before supply or under a contract of supply. 5.3 Also, section 2(19) of CGST Act defines capital goods as, capital goods means goods, the value of which is capitalized in the books of account of the person claiming the input tax credit and which are used or intended to be used in the course or furtherance of business. 5.4 As mentioned in paras above, as the demo vehicles are used by the authorized dealers to promote further sale of motor vehicles of the similar type and therefore, ..... X X X X Extracts X X X X X X X X Extracts X X X X
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