Question23: If a  company dealing in Manufacturing of Motor Vehicle Parts and want to buy a Vehicle (such as tempo, auto or other vehicle) meant for transport of their own goods to their customers. Are they eligible to avail GST and cess on purchase of such vehicle in the name of the company/firm etc.

Answer: The relevant provision are given in section 17(5) Same are as follow

(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 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; A per  above 17(5)(ii) the credit can be availled Now coming to the second point there is no restriction in claiming of credit of cess but the restriction is in using of credit .The cess can be used to pay cess only so the practical approach is that you should claim credit and keep it in balance and use that credit to pay cess when in future you are selling some  old vehicle in because that time you will need to deposit Cess in cash.  below given relevant section of the  Goods and services compensation to states act

11. (1) The provisions of the Central Goods and Services Tax Act, and the rules made thereunder, including those relating to assessment, input tax credit, non-levy, short-levy, interest, appeals, offences and penalties, shall, as far as may be, mutatis mutandis, apply, in relation to the levy and collection of the cess leviable under section 8 on the intra-State supply of goods and services, as they apply in relation to the levy and collection of central tax on such intra-State supplies under the said Act or the rules made thereunder.

(2) The provisions of the Integrated Goods and Services Tax Act, and the rules made thereunder, including those relating to assessment, input tax credit, non-levy, short-levy, interest, appeals, offences and penalties, shall, mutatis mutandis, apply in relation to the levy and collection of the cess leviable under section 8 on the inter-State supply of goods and services, as they apply in relation to the levy and collection of integrated tax on such inter-State supplies under the said Act or the rules made thereunder:  Provided that the input tax credit in respect of cess on supply of goods and services leviable under section 8, shall be utilized only towards payment of said cess on supply of goods and services leviable under the said section (Reply dt. 08/12/2017)