TMI Blog2021 (1) TMI 1193X X X X Extracts X X X X X X X X Extracts X X X X ..... AND SHRI VIRENDRA KUMAR JAIN MEMBER Present on behalf of applicant : CA. Pradeep Asawa and Palkesh Asawa PROCEEDINGS (Under sub-section (4) of Section 98 of Central Goods and Service Tax Act, 2017 and the Madhya Pradesh Goods Service Tax Act, 2017) 1. M/s JAIDEEPISPAT AND ALLOYS PVT LTD. (hereinafter referred to as the Applicant) is engaged in procurement of scrap for the purpose of manufacturing of M.S. billets by melting the same. The Applicant is having a GST registration with GSTIN23AABCJ4896R4ZQ. 2. The provisions of the CGST Act and MPGST Act are identical, except for certain provisions. Therefore, unless a specific mention of the dissimilar provision is made, a reference to the CGST Act would also mean a reference to the same provision under the MPGST Act. Further, henceforth, for the purposes of this Advance Ruling, a reference to such a similar provision under the CGST or MP GST Act would be mentioned as being under the GST Act. 3. BRIEF FACTS OF THE CASE - 3.1 The applicant is engaged in procurement of scrap for the purpose of manufacturing of M.S. billets by melting the same. The current advance ruling is sought in respect of availability ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nt to various customers on payment of applicable GST thereon. 6.4. As a standard operating procedure for procurement of such scrap and sponge iron (hereinafter referred to as the concerned inputs ), the applicant maintain various documents, the details of which are given above. That, the applicant maintains an ERP system whereby the same procedure is followed for all procurements of the concerned inputs and related entries are made in their accounting software. 6.5. The Applicant argues about the applicable provisions in the GST Acts and GST Rules- 1. As per sub-section (1) of Section 16 of the GST Acts - Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person 2. The above provision says that the admissibility of input tax credit is subject to such conditions and restrictions as may be prescribed. Further, the sub-se ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... WHICH ADVANCE RULING IS SOUGHT) - 1. The question posed before the Hon'ble Advance Ruling Authority is whether ITC is admissible on procurement of the concerned inputs if the procedure as elaborated below is adopted by the applicant in respect of inward supply of scrap and sponge iron used by the applicant for manufacture of M.S. billets? 2. The applicant submit that, in their opinion, the procedure adopted by the applicant and the documents/records maintained by the applicant is sufficient compliance of the conditions and restrictions for input tax credit as given under the GST Acts, and therefore the ITC should be admissible on the concerned inputs based on the procedure detailed below. This opinion is based on the following assertions. 6.7. Input tax credit admissibility - 1. The admissibility of input tax credit (ITC) of the input tax paid on the concerned inputs is principally based on two important aspects as noted below - a. Whether ITC on concerned inputs is admissible (and not specifically excluded) b. Whether the prescribed conditions for claim of ITC are being met 2. Appellant submit that, as far as the generally admissibility of the c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicant shall also be in possession of a valid contract with the vendors for procurement of the concerned inputs and shall place a purchase order specifying the quantity and the agreed price of the same. The details of the invoice shall match with the details mentioned on the valid purchase/requisition order. 4. The invoice shall be entered in the ERA accounting system implemented by the applicant which shall mention the date of receipt, the quantity and the value of the goods along with the taxable value and the input tax credit availed thereon. Applicant further submit that all the accounts and records as specified in Section 31 of the GST Acts read with Rule 56 of the GST Rules. 5. Therefore, the first requirement for admissibility of ITC, i.e. the possession of a valid taxpaying document, is being fulfilled by the applicant along with proper accounts and records as required by various provisions in the GST Acts. 6.9. Records showing actual receipt of goods- 1. Further to the above, in respect of the second requirement, i.e. actual receipt of goods, applicant further submit that they are keeping various records to ensure that the receipt of such goods is properly ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ent note showing the details of the vehicle through which the material was transported; and (c) an e-way bill in accordance with the GST Rules mentioning the requisite invoice, consignment and vehicle details. 6.10. Tax charged in respect of the supply having been paid to the Government- 1. Another condition for admissibility of the input tax credit is that the tax charged in respect of the said supply should have been paid to the Government. In this respect, applicant submits that they are taking all precautions to ensure the same. 2. Firstly, it is pertinent to note that as per Section 49 of the GST Acts, it is clarified that payment of tax can be made by utilising the amount in electronic cash ledger or electronic credit ledger of the taxpayer. The relevant portion (sub-sections (3) and (4) of the said section) is reproduced below for ease of understanding - (3) The amount available in the electronic cash ledger may be used for making any payment towards tax, interest, penalty, fees or any other amount payable under the provisions of this Act or the rules made there under in such manner and subject to such conditions and within such time as may be prescribe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... egistered person. b. On the basis of this, it can be seen that the vendors of the concerned inputs are filing their GSTR-1 and GSTR-3B return. Further, it is also made sure that the details of the supplies from these vendors have actually been reflected in their GSTR-1 return by cross-tallying the details as appearing in the GSTR-2A statement appearing on the GST Portal of the applicant, which is auto-populated on the basis of various inward supplies uploaded by various vendors of the applicant. c. This shows that the compliance of both the above mentioned conditions is ensured by the applicant, i.e. that the tax charged in respect of the supply is paid to the government (which is done by way of filing GSTR-3B return as mentioned in Section 59 of the GST Acts), as well as that Rule 36(4) is also complied with (which is done by way of filing GSTR-1 return). A copy of the report generated from the portal is enclosed herewith for your perusal. 8. Further to the above, appellant wishes to place on record that it is not possible to take any further precautions to make sure that the tax has in fact been paid by the vendor. That, merely the fact that GSTR-3B return has been filed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... purchasing dealer a tax invoice in terms of Section 50 of the DVAT Act. Such tax invoice would obviously set out the TIN number of the selling dealer. The purchasing dealer can check on the web portal of the Department if the selling dealer is a fictitious person or a person whose registration stands cancelled. As long as the purchasing dealer has taken all these steps, he cannot be expected to keep track of whether the selling dealer has in fact deposited the tax collected with the Government or has lawfully adjusted it against his output tax liability. The purchasing dealer can, of course, ascertain if there is any mismatch of Annexures 2A and 2B but, assuming it is on account of the seller's default, there is little he can do about it. Another difficulty that the purchasing dealer would face is that he would have no access to the return filed by the selling dealer particularly since under Section 98 (1) of the DVAT Act those particulars are meant to be confidential. Under Section 98 (3) (j) of the DVAT Act, it is possible for the Commissioner, where he considers ii desirable in the public interest, to publish such information. That hinges on the Commissioner placing t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... asonable steps to ensure that appropriate excise duty paid on inputs on which credit is taken - Explanation to sub-rule provides that assessee shall be deemed to have taken reasonable step if they satisfied themselves about identity/address of input manufactures/supplier either from their personal knowledge or certificate issued by Excise Department - Since, suppliers are registered with Department, assessee discharged their onus under Cenvat Credit Rules, 2004. [paras 5.3, 5.4] ii. VIKRAM KNITTEX PVT. LTD. Versus COMMISSIONER OF CENTRAL EXCISE, SURAT-[2008 (230) E.L.T. 190 (Tri. - Ahmd.) wherein it is held that Cenvat/Modvat -Documents for availing credit - Address and identity of manufacturer found to be fake and fictitious - Appellants taken sufficient precautions as they received goods from a registered dealer who happened to be a manufacturer Certificate from Bank of Baroda also produced which furnished details about collection of an amount paid by supplier - Credit taken by appellants is in order in terms of Rule 7(2) of Cenvat Credit Rules, 2002 - Rule 9 of Cenvat Credit Rules. 2004. [paras 2,3] iii. BHUWALKA STEEL INDUSTRIES LTD. Versus COMMISSIONER OF C.EX ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n the records with the applicant evidencing the due payment. In some cases, advance payment is made to the vendor for the concerned inputs and therefore this situation is not applicable in those cases. A copy of the voucher is enclosed herewith. 5. In view of above all the conditions and restrictions prescribed for admissibility of input tax credit has been fulfilled by the applicant. Applicant therefore submit that since as per section 97(2) of the act the advance ruling can be sought in respect admissibility of input tax credit and admissibility of input tax credit is dependent on fulfillment of conditions and restrictions prescribed in section 16 of the act read with rule 36 of the rules, the Hon'ble advance ruling authority may please admit the application and pronounce its advance ruling on the question of admissibility of ITC on the basis of procedures and conditions fulfilled by the applicant. 6.15. Conclusion- In view of above as submitted hereinabove, the applicant is fulfilling all the prescribed procedures and conditions given in the GST Act and rules for admissibility of the ITC. Hence it is requested to pronounce the ruling in favour of the applicant. ..... 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