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2019 (3) TMI 758 - AAAR - GSTInput Tax Credit (ITC) - Transitional credit - Whether computers, laptops etc., used by the applicant for providing output service would qualify as inputs for the purpose of availing transitional ITC under Section 140(3) of KSGST Act? - If the goods are physically available as closing stock as on 30th June, 2017, can the applicant avail ITC for the VAT paid? Held that:- In the GST period, the input tax credit of Tax paid on Computers, Laptops etc., can only be claimed as "Capital Goods" but not as "Inputs." - As per Clause (ii) of Section 140(3) of the KSGST Act, 2017, a registered person is eligible for Input Tax credit, if he is also eligible under the KSGST Act, 2017 to claim thc Input Tax credit on such Inputs. Since, the Computers, laptops etc., fail to qualify as "Inputs" under KSGST Act, 2017 and thereby fail to satisfr the condition set under Clause (ii) of Section 140(3) of the KSGST Act, 2017, hence they are not eligible to claim Input Tax credit under transitional provisions of the VAT paid during the pre-GST period on the computers and laptops etc., physically available on 30th June, 2017 - the Computers, Laptops etc., which were lying in stock as on 30,06.2017 were declared as capital assets prior to GST and used by the appellant for providing output services. Thereby they had no tax liability under the erstwhilc KVAT law. Further, they squarely fall under the definition of "Capital Goods" under Section 2(19) of the KSGST Act, 2017 and not under Section 2(59) of the KSGST Act, 2017. Hence the relevant transitional provision applicable in the instant case is Section 140(2) of the KSGST Act, 2017 and Section 140(3) Of the KSGST Act cannot be invoked. As per section 140(2) of the KSGST Act 2017, a registered person, other than a person opting to pay under Section 10, shall be entitled to take, in his electronic credit ledger, credit Of un-availed input tax credit in respect Of capital goods, not carried forward in a return, furnished under the existing law by him, for the period ending with the day immediately preceding the appointed day in such manner as may be prescribed. Proviso to the said sub-section of the Kerala SGST Act stipulates that the registered person shall not be allowed to take credit unless such credit was admissible as input tax credit under the existing law and is also admissible as input tax credit under the Act. The appellant being a service provider, had no tax liability under the erstwhile KVAT Act, and thereby was not eligible to avail input tax credit on computers and laptops held during the transition period. Hence the transitional input tax credit claim of the Taxpayer in respect of capital goods is not admissible as per the transitional provisions of the KSGST Act, 2017.
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