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2022 (3) TMI 573 - AAR - GSTInput Tax Credit - common services utilized for both taxable as well as exempted supply of Varnika (IMU) and printing press of rupee note located in Mysuru Unit - such as CISF & Township Security Services, Maintenance of Water Treatment Plant, Horticulture, Maintenance of Residential Quarters, Maintenance of Information System (Computers, Software & Electronic Equipment), Maintenance of Sewage Treatment Plant, etc. - turnover of which financial year to be considered in Rule 42 of the CGST Rules, 2017 while calculating ineligible ITC for the invoices which were accounted in the books of accounts in the FY 2019-20, however ITC was claimed during April to September of FY 2020-21 as per section 16(4) of the CGST Act, 2017. HELD THAT:- The applicant is engaged in printing of rupee notes, in their Mysuru Unit; supply the same to RBI on agreed rate of cost-plus margin basis which is wholly exempted from levy of GST vide S.No. 117 of Notification No. 2/2017 of Central Tax (Rate) and S.No. 117 of Notification No. 2/2017 of Integrated Tax (Rate). Further, the applicant also manufactures ink, which is used in printing of rupee notes, consumes captively, transfers to their branch located at Salboni, West Bengal and also supplies to M/s. Security Printing and Minting Corporation of India Ltd (hereinafter referred to as ‘SPMCIL'). Thus the applicant is involved in taxable as well as exempted supplies. Whether ITC can be claimed on common services which are utilized for both taxable as well as exempted supplies? - HELD THAT:- This question is not covered under the issued referred to in Section 97 (2), in respect which an applicant can seek advance ruling, as the ITC of the tax paid on common services, utilized for both taxable as well as exempted supplies is governed under Section 17 (2) of the CGST Act 2017 read with Rule 42 of the CGST Rules 2017 - any registered person, to avail the input tax credit, has to check the entitlement in terms of Section 16 (1) and also whether the said credit falls under the blocked credits in terms of Section 17(5) or not. If they are still entitled to avail the said credit, then they should apportion the said credit in terms of Section 17(1) & Section 17 (2), if the relevant supplies are utilized partly for the purpose of business and partly for other purposes or partly for effecting taxable supplies including zero-rated supplies and partly for effecting exempt supplies, as per Rule 42 of the CGST Rules 2017. Therefore the applicant has to check each and every supply in the manner mentioned above and then decide whether they are entitled to avail the credit and if so to what extent. Whether the method followed by the applicant in connection with claiming of Input Tax Credit is in accordance with the provisions of law? - HELD THAT:- The applicant is involved in supply of both taxable and exempted supplies. Thus the applicant has to avail the credit proportionately in terms of Section 16, 17 of the CGST Act 2017 read with Rule 42 of the CGST Rules 2017, wherein the procedure to be followed has been clearly mentioned - the inward supplies of goods or services are used for both taxable and exempted supplies and the applicant is entitled to avail the input tax credit, on the said goods or services, to the extent of taxable outward supply. The amount of ITC to be reversed proportionate to taxable outward supply need to be determined as per Section 17 (2), 17(6) of the CGST Act 2017, read with Rule 42 of the CGST Rules 2017, for a particular financial year. Turnover of which financial year to be considered in Rule 42 of the CGST Rules, 2017 while calculating ineligible ITC for the invoices which were accounted in the books of accounts in the FY 2019-20, however ITC was claimed during April to September of FY 2020-21 as per section 16(4) of the CGST Act, 2017 - HELD THAT:- Manner of claim of ITC is determined in terms of Rule 42 of the CGST Rules, 2017 and the impugned issue is not covered under Section 97(2) of the CGST Act, 2017 and hence this authority refrains from giving any ruling in this regard - However, it is observed that the turn over of 2019-20 only need to be considered as the Rule 42 of the CGST Rules 2017 is applicable only for a particular tax period only.
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