Input tax credit— In the instant case, the applicant is  engaged in the business of resale and service of Motor Vehicles of the brand name "BMW".

The applicant sought Advance Ruling on the following question/issue.-

1. Can Payment of GST Liability on sale of vehicle, spares, labour can be done by utilising the Input GST on purchase of Demo Vehicle, other expenses like Repairs & Maintenance, Insurance etc., relating to Demo Vehicle used for Demonstration and or Trial run purpose?

The availability of input tax credit shall be subject to the provisions of Section 18(6) of the GST Act. In the case of supply of capital goods on which input tax credit has been taken, the registered person shall pay an amount equal to the input tax credit taken on the said capital goods reduced by such percentage points as may be prescribed or the tax on the transaction value of such capital goods determined as value of taxable supply, whichever is higher."

In this case, demo vehicles is used for furtherance of supply of such vehicles (such as demo car) as the prospective buyer is subjected to training about the features of the car and how to use them and is also used for driving including the test drives.

Held that— The Advance Ruling is allowed in favour of M/s TITANIA PRODUCTS PRIVATE LIMITED, having GSTN No- 20AAECT4112F1Z2 and the company can claim and set-off the Input Tax Credit of Demo vehicles along with repair, maintenance & insurance under GST