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2020 (8) TMI 518 - AAR - GSTInput Tax Credit - financial institution or not - option provided under Section 17(4) of the CGST Act which prescribes to avail an amount equal to 50% of eligible credit of input tax on inputs capital goods and input services in that month and the rest shall lapse - HELD THAT - The conditions to be fulfilled for exercising the option under sub-section (4) of Section 17 is that the supplier shall be engaged in supplying services by way of accepting deposits extending loans or advances and the supplier shall be a banking company a financial institution or a non-banking financial company. Both the conditions shall be simultaneously satisfied to be eligible to exercise the option as provided under sub-section (4) of Section 17 of the CGST Act 2017. Admittedly the applicant is engaged in supplying services by way of accepting deposits extending loans or advances. Therefore the issue to be determined is whether the applicant qualifies to be a banking company a financial institution or a non-banking financial company. The terms banking company a financial institution or a non-banking financial company are not defined under the CGST Act 2017. However the terms are defined in the explanation to subsection (8) of Section 13 of the Integrated Goods and Services Act 2017. Even though the definition in the explanation is for the purpose of that sub-section the definition can be adopted in the instant case also as the terms are not elsewhere defined in the IGST Act or the CGST Act - On a conjoint reading of the provisions of clauses (c) and (e) of Section 45-1 of the Reserve Bank of India Act 1934 it is evident that the applicant being a Co-operative Society registered with the Central Registrar of Co-operative Societies carrying on the business of financing whether by means of making loans or advances or otherwise of any activity other than its own qualifies to be a financial institution as per the Reserve Bank of India Act 1934 and consequently also under the CGST Act 2017. The applicant satisfies both the conditions to be eligible for exercising the option provided under sub-section (4) of Section 17 of the Central / State GST Act 2017.
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