In re Khatwani Sales And services LLP (GST AAAR Madhya Pradesh)
The primary intention of appellant to purchase demo vehicles is to use it for demonstration and trial for the customers. He has, as per his statement, capitalised these purchases of demo vehicles in his books of account and these demo vehicles are used and replaced earlier of folic wing (a) 40,000 kms or above (b) continuation of model. It means that these vehicles have very specific object to serve and after that, these are subsequently supplied by way of sale as old, used and second hand vehicle. It is worthy to mention here that there is no question of cascading effect since the issue is already clear in light of notification no. 8/2018 central tax (rate) dated 25/01/2018, Explanation no. (i) of this notification stated that, “in case of a registered person who has claimed depreciation under section 32 of the Income-Tax Act, 1961 (43 of 1961) on the said goods, the value that represents the margin of the supplier shall be the difference between the consideration received for supply of such goods and the depreciated value of such goods on the date of supply, and where the margin o ?such supply is negative, it shall be ignored”.
After close examination of the ruling of Madhya Pradesh Advance Ruling Authority and representation of appellant, we find that the ruling given by the Madhya Pradesh Advance Ruling Authority is reasonable and appropriate. Section 17(5) (a) prescribes the condition in which input tax credit shall not be available on motor vehicles for transportation of persons having approved seating capacity of not more than thirteen persons (including the driver), except when they are used for making the following taxable supplies:-
(A) further supply of such motor vehicles; or