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2020 (10) TMI 808 - AAR - GSTInput tax credit - proportionate claim - procurement of Inputs/Capital Goods and ‘Input services’ for for setting up the Solar PV system and installation of the same - whether the goods/services procured can be considered as ‘Capital goods’? - what should be considered as total Turnover for arriving at the attributable credit? HELD THAT:- As per Section 16 (1), it is evident that a registered person is 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. Section 16 (2) provides that such person will be eligible for such credit only when he is in possession of a tax invoice, has received the goods or services, paid the tax charged on such supply and has furnished the returns. Section 16 (3) provides that if depreciation is claimed the ITC on the said tax component is not available. The plain reading of the above statute and applying to the case at hand, prima facie, it indicates that the credit of Input tax on the inputs/inputs services used in setting up of the ‘Renewable Energy Generator’ in the furtherance of their business, is permitted under these provisions. The applicant has stated that they are in receipt of the goods/services, possess the invoices and paid the taxes and thus fulfills the conditions stipulated under Section 16(2) and have not claimed depreciation under Income-tax provisions, thus have fulfilled provisions of Section 16(3) of the Act. The taxes paid on Inputs/capital goods and Input services used in the course or furtherance of business are permitted to be availed as per Section 16 of the Act. Section 17 (2) provides for apportionment of credits pertaining to supply of taxable supply when the said Inputs, Capital Goods and Input services are used to make both exempted and taxable supply - the RE power generator is used in the business by the applicant and the output of such RE Power Generator is Electricity and Renewable Energy Certificate - the proportionate claim of Input Tax Credit is available for the applicant and the provisions of Section 17(2) applies to the case at hand. Whether they could consider the solar panels and its installation cost as ‘Capital Goods used for both taxable and exempt purpose and claim the Input Tax as Prescribed in Rule 43 of the Act? - HELD THAT:- The applicant has furnished only the list(Statement) with the particulars as detailed above, Invoice No., Taxable Value, Tax Rate, Type of Tax and Total Tax Value. The said statement consists of both ‘Goods’ and ‘Services’. While ‘Goods’ if capitalised may be termed as ‘Capital Goods’, the services are in no way ‘Capital Goods’ but are ‘Input Services’ consumed by the applicant - the applicant has just furnished the list and has not furnished any documentary proof to establish that the goods listed in the statement furnished have been capitalised in their books of accounts - thus, subject to the goods being capitalised in their books of account, the applicant is eligible to claim Input tax on such goods as ‘Capital Goods’ and the Provisions of Rule 43 of the GST Rules is applicable to determine the eligible credit in respect of the taxable supplies made by them. In respect of Inputs and Input services, the attributable credit is to be arrived at by applying Rule 42 of the GST Rules. The applicant has further sought to clarify as to whether they could apportion the common credit using total turnover of the registered person for the tax period, i.e., Turnover of the tax period of existing business + Turnover of the tax period of the new Power Generation business - it sis found that both under Rule 42 and Rule 43, the ‘F’ in the Formula denotes the ‘Total Turnover[in the State] of the registered person during the tax period’. It is clear that the rule wants the ‘total turnover’ to be considered against ‘F’ in the formulae under Rule 42 & Rule 43 of the GST Rules. In the applicant’s case at hand, therefore, we clarify that the ‘Total Turnover of the Registered Person’ should include the ‘Turnover of Edible Oil Business’ and ‘Total Turnover of Power Generation Business’. Thus, the applicant is eligible for Proportionate claim of Input Tax Credit as per Section 17 (2) of the CGST/TNGST Act read with Rule 42/Rule 43 of CGST/TNGST Rules 2017 on the Goods/Services used in installation of Renewable Power Generation Plant under the ‘REC Scheme’.
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