Page 41 - GSTL_21st May 2020_Vol 36_Part 3

2020 ] SUPPLY OF DEMO CARS — RATE OF GST & ITC AVAILABILITY J67
(1) Whether such sale by Mr. Y tantamount to sale of old car and
used vehicle?
(1.1) At the outset, in terms of Section 7 read with Section 9 of CGST
Act, 2017, the said transaction is supply and taxable under GST
law as per the taxable value determined under Section 15 of
CGST Act, 2017 and at a rate of tax as prescribed by the Central
Government in this regard. GST laws do not distinguish between old
or new car.
(1.2) Now putting reliance on the facts of the case, the dealer of the
car has taken registration of the motor vehicle in his name which
was used by him for demo and trial run for its customer which
was later on transferred to its customer. So by virtue of registra-
tion taken the first owner of the vehicles becomes the dealer
himself.
(1.3) Now on account of sale to customer the vehicle registration got
transferred to customer which made the car used vehicles there-
by attracting the provisions of old and used vehicle.
(1.4) The dealer at the time of registration and purchase would have
booked the vehicle as fixed asset in its books of accounts wheth-
er or not the ITC of the same has been claimed. (Same is dealt in
second part).
(1.5) Since GST Act is silent, now for the sake of legal support, refer-
ence need to be taken from Motor Vehicles Act, 1988 (hereinafter
referred as “the Act”) read with Motor Vehicles Rules, 1989
wherein Section 39 of the Act read with Rule 41, which states
that no person shall drive any motor vehicle in public place without
certificate of registration as mentioned and defined in Section 2(4)
of the said Act.
(1.6) Further certain relaxation is given to the dealer of car with re-
gards to obtaining registration certificate of the car in the proviso
to Section 39 of the Act, which has been further clarified with
various instances in Rule 41 amongst them clause (c) of the said
rule is reinstated herewith for ready reference -
“R.41(c) for a reasonable trial or demonstration by or for the
benefit of a prospective purchaser and for proceeding to or return-
ing from the place where such person intends to keep it;”
(1.7) Now based on above extract of the rule, the Act read with rule
has empowered car dealer and permitted them to keep a car for
demo or trial run for its customer without certificate of registra-
tion.
(1.8) Thus, the Act has given dealer ample space for their furtherance
of business. So once the vehicle is registered under the name of
GST LAW TIMES  21st May 2020  41