Trace Your Case

RE: CHOWGULE INDUSTRIES LTD, 2019

Re: Chowgule Industries Ltd (2019, Mah, AAR):

ISSUE:

  • Whether the input tax credit (ITC) on motor vehicles purchased for demonstration purposes is available ?

RULE:

  • The input tax credit (ITC) on motor vehicles purchased for demonstration purposes is available.

FACTS:

  • Chowgule Industries Ltd is a company that sells motor vehicles.
  • The company purchases motor vehicles from registered dealers.
  • The company uses the motor vehicles for demonstration purposes to promote the sale of its products.
  • The company claimed the input tax credit (ITC) on the motor vehicles purchased for demonstration purposes.
  • The tax authorities denied the ITC on the motor vehicles, arguing that the motor vehicles were not used for business purposes.
  • The company appealed to the Authority for Advance Ruling (AAR) in Goa.

HELD:

  • The judgement in the case of Chowgule Industries Ltd, 2019 was given by the Authority for Advance Ruling (AAR) in Goa.
  • The AAR is a quasi-judicial body that is set up under the Goods and Services Tax (GST) Act to provide advance rulings on GST-related matters.
  • The AAR in Goa held that the input tax credit (ITC) on motor vehicles purchased for demonstration purposes is available.
  • The AAR reasoned that the use of motor vehicles for demonstration purposes is an essential part of the marketing and sales process of the company.
  • Therefore, the motor vehicles are used for business purposes and the ITC on these vehicles is available.
  • The AAR’s decision is significant for businesses that purchase motor vehicles for demonstration purposes.
  • It clarifies that the ITC on these vehicles is available, which can lead to a significant reduction in the cost of doing business.