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TMI Blog2025 (1) TMI 616X X X X Extracts X X X X X X X X Extracts X X X X ..... facts, shall render such ruling to be void ab initio in accordance with Section 104 of the Act. At the outset, we would like to make it clear that the provisions of both the Central Goods and Services Tax Act and the Tamil Nadu Goods and Services Tax Act are in pari materia and have the same provisions in like matters and differ from each other only on few specific provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the Central Goods and Services Tax Act, 2017 would also mean a reference to the same provisions under the Tamil Nadu Goods and Services Tax Act, 2017. 2. M/s A2Mac1(India) Private Limited (hereinafter 'the Applicant') submitted a copy of challan CIN-HDFC23093300396513 dated 25-09-2023 evidencing payment of application fees of Rs. 5,000/- each under sub-rule (1) of Rule 104 of CGST Rules 2017 and SGST Rules 2017. The online application form for advance ruling dated 4th Oct, 2023 was physically received on 15-11-2023 as mandated under Rule 107A. 3. STATEMENT OF RELVANT FACTS AS NARRATED BY THE APPLICANT: * M/s A2Macl (India) Private Limited (hereinafter 'the Applicant') is incorporated under the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d a detailed process flow of the activities undertaken by them connected to vehicle dynamic benchmarking process with relevant images. * The cost of the vehicle bought and used for automotive benchmarking process are expensed out in the books. Further, at the end of specific/vehicle retention period, they are sold and the Applicant is of the view that it is an activity of 'supply' in the course of its business and discharges applicable GST on such transactions. * The Applicant submits that the issue for consideration is the admissibility of the input tax credit of tax paid on the purchase of new vehicles/cars. As the applicant is providing taxable service using vehicles/cars for research purposes, the purchase of vehicles/cars are integral part of the business model. The cost of purchase of vehicles/cars are predominant to the business without it the main revenue stream of the Applicant i.e, supply of services via platform subscription would fail. * The Applicant seeks to clarify whether the input tax credit on the purchase of vehicles/cars are claimable, in terms of Section 17 (5) (a) of the Central Goods & Service Tax (CGST) Act, 2017. Applicant has furnished a stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 17 (5) (a) (A) of the Act and hence the applicant is eligible to avail input tax credit on purchases of motor vehicles which can be set-off against output tax payable under GST. * The applicant submitted that the term 'further supply' has not been defined in the GST Act and therefore one has to go by the definition of 'supply' which is the very plinth of GST law. The term 'further' prefixed to 'supply' is merely in the form of an adverb and does not differentiate it from 'supply' in any way. Thus, it makes the applicant eligible for availment of input tax credit on motor vehicles for the tax paid by them while acquiring the said vehicle. * The applicant relied upon the findings of AAR, Kerala in the case of M/s. A.M. Motors, wherein, while analyzing the issue that whether ITC on motor car purchased for demonstration purpose of the customers can be availed as credit and set off against output tax payable under GST, the AAR held that, 'goods which are used in the course or furtherance of business, is entitled for input tax credit. As the impugned purchase of demo car is in furtherance of business, the applicant is eligible for input ta ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ling are related to purchasing of vehicles which are used as demo vehicles, vehicles used for rental/leasing purposes. * In the applicant's case, they share their knowledge acquired by studying the automobiles as service which is different from the citations presented by them. * Hence, ITC is not admissible for the applicant and informed that there is no proceedings pending before them. 6. COMMENTS OFFERED BY AC, MM NAGAR DIVISION, CHENNAI OUTER, CGST * Reproducing the relevant portion of Section 17 (5) of the CGST Act, 2017, the jurisdictional officer stated that the applicant is not eligible to avail ITC on purchase of motor vehicle, since they are not engaged in same line of business. The applicant is engaged in providing collaborative bench marking service by data management online platform to the customers (subscribers). The nature of business of the applicant is classified under SAC code 998331 as 'Engineering Advisory Services' which shall not be construed as same line of business. * The applicant's reference to a decision of AAR mentioned in the application is not relevant as all the three namely, M/s. A.M. Motors, M/s. Chowgule Industries (P) Ltd a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicant has filed an Advance ruling application seeking ruling on the following query. Query 1 Whether input tax credit can be claimed on the purchase of motor vehicles in terms of exception provided under Section 17 (5) (a) of Central/Tamilnadu Goods and Services Act, 2017. 9.1 Input Tax Credit (ITC) on inputs and input services is a facility provided by the Government to avoid cascading effect of tax on tax. Chapter-V of the CGST/TNGST Act, 2017 deals with the 'Input Tax Credit' where the conditions, eligibility, apportionment, reversal and ineligibility were provided with explanations. Hence purchases made for business purposes plays a crucial role in reducing the overall tax burden. Section 16 of the Act, stipulates the eligibility and conditions for taking the input tax credit. Section 17 and its provisions deals with the apportionment of credits and blocked credits. Section 17 (5) of the Central Goods and Services Tax (CGST) Act, 2017, restricts ITC on certain supplies received by a registered taxpayer. One such restriction is on motor vehicles used for the 'transportation of persons'. 9.2. As a general rule, Input Tax Credit is not available on motor v ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capacity of not more than thirteen persons (including the driver), except when they are used for making the following taxable supplies, namely:- (A) further supply of such motor vehicles; or (B) transportation of passengers; or (C) imparting training on driving such motor vehicles;¹ (aa) vessels and aircraft except when they are used- ............ ............ 9.3 Further, the definition of 'Motor Vehicle' is provided under Section 2 (76), of CGST/TNGST Act, 2017, wherein, 'Motor vehicle' shall have the same meaning as assigned to it in clause (28) of Section 2 of the Motor Vehicles Act, 1988 (59 of 1988); As per the definition contained in clause (28) of Section 2 of the Motor Vehicles Act, 1988, "motor vehicle or vehicle means any mechanically propelled vehicle adapted for use upon roads whether the power of propulsion is transmitted thereto from an external or internal source and includes a chassis to which a body has not been attached and a trailer; but does not include a vehicle running upon fixed rails or a vehicle of a special type adapted for use only in a factory or in any other enclosed premises or a vehicle having less than four whe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... en if it is used for any activity relating to business. Any other outward supplies using the motor vehicle for transportation of persons (having approved seating capacity of not more than 13 persons) are not eligible to claim input tax credit on such motor vehicle. 12. By providing an exception to the exclusion for availability of Input Tax Credit, the law is very clear and specific that except for the exceptions provided as sub-clause (A), (B) and (C), the input tax credit on the purchase of vehicles irrespective of any kind of outward supplies shall not be eligible. Hence, it is clear that for a motor vehicle specified in 17 (5) (a) of the Act, even if it is used for supplying goods or services is not eligible for availment of input tax credit, irrespective of whether or not it is used in providing taxable outward supply. 13. The normal practice and understanding is that a motor vehicle, in the nature of cars or SUVs are normally intended to be used for 'transportation of persons', if it is for personal or official use. The second one at sub-clause (B) is for 'transportation of passengers'. As per the definition contained in Oxford Dictionary, "passenger", is a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... are 'old and used motor vehicle'. However, this facility is not available if the supplier has availed input tax credit as defined in clause (63) of Section 2 of the Act. Further, in Chapter-IV of Determination of value of supply', Rule 32 (5) of the CGST Rules, 2017 prescribes valuation to be adopted for supply of second hand goods, i.e 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 supply is negative, it shall be ignored. Though they have informed that appropriate GST has been paid while clearing the motor vehicles after a retention period, they have not disclosed how the transaction value is arrived for discharging the tax. 'Used car' becomes an 'old car' after use, can be sold only as second hand sales. Hence, the input tax credit is not available to the applicant who clears the motor vehicles after use. 17. On perusal of the sample invoices relating to supply of motor vehicles after retention period, it is see ..... X X X X Extracts X X X X X X X X Extracts X X X X
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