2026-VIL-01-AAR
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SGST Advance Ruling Authority

GST – Kerala AAR - Admissibility of Input Tax Credit under Margin Scheme for Second-hand Vehicles - Business of buying and selling second-hand motor vehicles. Before resale, the applicant undertakes minor repairs and refurbishments to enhance the vehicles' market value without altering their essential character. The applicant also incurs various common business expenses such as office/showroom rent, telephone, advertising, professional fees, and procures capital goods like workshop equipment, office infrastructure, and demo vehicles - Whether ITC admissible on inward supplies of goods or services which are in the nature of direct expenditures like spare purchases, repairs and refurbishment costs of vehicles, except on the purchase of old or used motor vehicles – HELD – The Notification No. 8/2018-Central Tax (Rate) dated 25th January 2018 restricts ITC only on the purchase of used motor vehicles themselves. There is bar under the notification on claiming ITC on other inward supplies, including but not limited to spare parts, repair and refurbishment services, rent, advertising, professional services, or capital goods utilized in the course of business - The input tax credit on inward supplies such as spare parts, repairs, and refurbishment services is admissible to the applicant subject to compliance with the conditions prescribed under Sections 16 to 21 of the CGST Act, 2017 and Rules 36 to 45 of the CGST Rules, 2017 – The applicant is eligible to claim input tax credit on both direct and indirect expenses incurred in the course or furtherance of business, except on the purchase of used motor vehicles themselves, subject to compliance with the relevant provisions of the CGST Act and Rules - Ordered accordingly - Whether input tax credit is admissible on inward supplies of other goods or services such as office/showroom rent, telephone, advertisement, professional charges, and capital goods, except on the purchase of old or used motor vehicles as mentioned in Notification No. 8/2018-Central Tax (Rate) dated 25th January 2018 – HELD - The input tax credit on inward supplies of goods or services such as office/showroom rent, advertisement, telephone, professional fees, and capital goods is admissible, as there is no restriction under Notification No. 8/2018-CT (Rate) or Rule 32(5) regarding such expenses. The availment shall be subject to fulfillment of the conditions under Sections 16 to 21 of the CGST Act and Rules 36 to 45 of the CGST Rules.
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