Case Of: M/s BMW India Pvt. Ltd.
Issued By: Punjab & Haryana High Court
Order No: CWP-7235-2022
Date: 12th November 2024
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Input Tax Credit on Demo Vehicles Deemed Eligible as Capital Goods Under GST Framework and CBIC Circulars
The petitioner, M/s BMW India Pvt. Ltd., contested rulings by the AAAR and AAR, Haryana, regarding the disallowance of ITC on demo vehicles.
The case concerned the eligibility of demo vehicles, used for promotional purposes, to qualify as “capital goods” under GST law.
The petitioner argued that demo vehicles meet the definition of “capital goods” under Section 2(19) of the CGST Act and are used in the course of business.
The AAR and AAAR had earlier denied ITC on the basis that such vehicles did not qualify for input tax credit under the GST framework.
The High Court relied on CBIC Circular No. 231/25/2024-GST and similar Haryana Government clarifications, which explicitly allow ITC on demo vehicles.
The Court observed that denying ITC on demo vehicles capitalized in books contradicted the provisions of Section 16 and Section 2(19) of the CGST Act.
The orders of the AAR and AAAR were set aside, and the Court clarified that demo vehicles qualify as “capital goods” under GST law.
The petitioner was granted entitlement to ITC on demo vehicles, subject to compliance with other provisions of the Act.