Second Hand Cars dealer paying GST at concessional rate not allowed to claim ITC of indirect expenses: AAR

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  • Last Updated on 27 December, 2021

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Input tax credit – Indirect expenses incurred for purpose of business

Case Details: Authority for Advance Rulings, Maharashtra Deccan Wheels, In re - [2021] 133 taxmann.com 235 (AAR - MAHARASHTRA)

Judiciary and Counsel Details

    • Rajiv Magoo and T.R. Ramnani, Member

Facts of the Case

The applicant was engaged in business of purchasing second hand cars (good). It purchased goods and after minor processing such as change of tyres, change of battery, painting, denting, repairs, servicing, internal cleaning, polishing, etc., the said goods would be sold. It filed an application for advance ruling to determine whether it can claim input tax credit on other indirect expenses incurred for purpose of business such as rent, commission, professional fees, telephone, etc.

AAR Held

The Authority for Advance Ruling observed that the applicant has opted for Margin Scheme prescribed under Notification No. 8/2018 -Central Tax (Rate) 25th January, 2018. This scheme provides that the concessional rate under the said notification shall not apply, if the supplier of such goods has availed input tax credit. Since the applicant has been availing the benefit of the said notification and paying GST at a concessional rate, it was held that the applicant shall not be allowed avail Input Tax Credit of indirect expenses as well.

Income Tax Returns 2021-22

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