The Goa bench of Bombay High Court has held that the Central Board of Indirect Taxes and Customs (CBIC) Circular clarifying Input Tax Credit (ITC) availability on demo vehicles prevails over order passed by the Appellate Authority of Advance Ruling (AAAR).
The bench of Justice M. S. Karnik and Justice Valmiki Menezes has observed that post issuance of the order by AAAR; the CBIC has issued circular dated 10.09.2024 clarifying that ITC would be available in respect of demo vehicles. The circular would prevail over the order of the AAAR.
Background
The petitioner/assessee is an authorised dealer for sale of Maruti motor vehicles. It purchases and sells motor vehicles. It places a “demo vehicle” at the showroom for demonstration to customers. It availed input tax credit on demo vehicles. The demo car will be sold after some time.
It applied to Authority for Advance ruling. The AAR ruled that ITC on demo vehicles is not available as the ITC is not used on “such” vehicles which are sold and the value of demo vehicles is capitalised in the books. Appeal was rejected by the Appellate Authority for Advance ruling.
Conclusion
The court held that the petitioner would be entitled for benefit of the input tax credit on demo vehicles in terms of the said circular dated 10.09.2024.
Case Details
Case Title: Sai Service Private Limited Versus Union Of India
Case No.: Writ Petition No.622 Of 2024
Date: 24/10/2024
Counsel For Petitioner: Bharat Raichandani, Vibhav Amonkar
Counsel For Respondent: Asha Desai
