ITC is available on inward supply of motor vehicles used for demonstration purpose

Last updated: 27 November 2024

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The Kerala Authority for Advance Ruling (AAR) has ruled that Input Tax Credit (ITC) is available on motor vehicles used for demonstration purposes. The AAR found that these 'demo cars' are essential for sales promotion, as customers prefer test drives before purchasing. Therefore, they are considered to be used in furtherance of business, making the ITC claim valid, provided the vehicles are subsequently sold.

Court :
Kerala AAR

Brief :
The Kerala AAR, in the case of Sai Service (P.) Ltd., In re [Advance Ruling No. KER/09/2024 dated January 10, 2024] held that where demo cars are crucial for sales promotion, since, prospective customers prefer to test drive cars before they make a decision, therefore, demo cars are put to use for furtherance of business as envisaged under Section 16 of the Central Goods and Service Tax, 2017 ("the CGST Act"). Hence, the Assessee is entitled to avail Input Tax Credit ("ITC") on inward supply of motor vehicles which are used for demonstration purpose.

Citation :
Advance Ruling No. KER/09/2024 dated January 10, 2024

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1 Year PLAN

1999

(Excl. of GST ₹359)

2 Years PLAN

3499

(Excl. of GST ₹629)

BEST VALUE

3 Years PLAN

4999

(Excl. of GST ₹899)

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Attached File : 671907_5795_sai_service_p__ltd_.pdf

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Judgement posted by

Bimal Jain

Service

FCA, FCS LLB with21 Yrs of Experience inTaxation Indirect and Direct: Education Qualification: B.Com (Hons) Chartered Accountants Company Secretary LLB Qualified SAP FI/CO Consultants Professional Membership: Chairmanof Indirect Tax Committee of PHD Chamber of Commerce Member of Indirec ... Read more

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