ITC Question No.227

QUESTION

Whether I can claim ITC on purchase of Tempo ( four wheeler ) and Motor bike (two wheeler ) which will be used for delivery of goods ?

ANSWER

Facts of the case: Eligibility of ITC on purchase of Tempo ( four wheeler ) and Motor bike (two wheeler ) which will be used for delivery of goods.

Law applicable: SECTION 17 OF CGST ACT

(5) Notwithstanding anything contained in sub-section (1) of section 16 and subsection (1) of section 18, input tax credit shall not be available in respect of the following, namely:-

(a) 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, namely:-
        (A) further supply of such motor vehicles; or
        (B) transportation of passengers; or
        (C) imparting training on driving such motor vehicles; ---------------------------

Interpretation: The ITC is restricted under section 17(5) of CGST Act. Section 17(5)(a) specifically restricts ITC on motor vehicles used for transportation of Passengers except if used for above mentioned taxable supplies.

Since Section 17(5) no where blocks ITC on Motor vehicles used for transportation of goods, therefore ITC is eligible on motor vehicles used for transportation of goods.

Conclusion: ITC is eligible on Tempo ( four wheeler ) and Motor bike (two wheeler ) used for transportation of goods as it is not blocked under section 17(5) of CGST Act (Reply dt. 22/02/2021)