Can ITC be availed on purchase of spare parts for repair of motor vehicles ?
Input tax credit(ITC) is taxes paid on inward supply of goods as well as services.As per Section 17(5)(ab) no ITC is allowed on services of general insurance, servicing, repair and maintenance in so far as they relate to motor vehicles.
ITC on goods are not affected by this provision,as according to section 2(102) services means “anything other than goods,money and securities” .
Whenever a supply includes supply of goods and services and the value of such goods and services supplied are shown separately then the goods and services would be liable to tax at the rates as applicable to such goods and services separately.
If the supplier charges tax on the service provided to cars, then there is a clear distinction for the recipient between input on goods and input on services apparent from the underlying tax invoice for availing ITC.
In such case,the recipient would be eligible to claim ITC on such component of tax on goods in the form of spare parts since blockage of ITC under clause (ab) of section 17(5) is applicable only in the case of services.
