Mr. A registered in Haryana dealer of imported cars. Determine
the eligibility of input tax credit in following cases:
1. Mr A purchased 10 cars for Rs 12,00,000/- each for further supply. Out of which 1 car is destroyed in accident before reaching Mr A premises.
2. Mr A purchased 1 sports car for Rs 15,00,000/- for its personal use.
3. He purchased 2 second hand racing cars for Rs 6,00,000/- each for providing training on driving.
4. Works contract services availed for construction of showroom.
Under GST Act ITC is restricted under section 17(5). The availability of ITC in following case is as follows:
1. As per section 17(5)(a) ITC on motor vehicles is restricted as follows:
(a) motor vehicles and other conveyances except when they are used''
(i) for making the following taxable supplies, namely:'
(A) further supply of such vehicles or conveyances ; or
(B) transportation of passengers; or
(C) imparting training on driving, flying, navigating such vehicles or conveyances;
(ii) for transportation of goods
In the given case as the cars are purchased for further supply, therefore in view of exception given above Mr A is eligible to take ITC.
However on 1 car which is destroyed in accident ITC is not available as per section 17(5)(h) reproduced below:
(h) goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples.
2. Sports car is purchased for personal use, therefore ITC of same is not available as per section 17(5)(a).
3. Racing cars are purchased for the purpose of giving training therefore as per exception (i)(c ) ITC of the same is available.
4. Works contract service is availed for construction of showroom which is immovable property and as per section 17(5)(c ) ITC is restricted on works contract service if not used for further supply of Works contract service.