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TMI Blog2019 (3) TMI 758X X X X Extracts X X X X X X X X Extracts X X X X ..... ps and other goods lying in the physical possession of, the applicant as on 30th June, 2017. The appellant had preferred an application for advance ruling on the following: i) 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? ii) If the goods are physically available as closing stock as on 30th June, 2017, can the applicant avail ITC for the VAT paid? 3. During the advance ruling proceedings, the authorized representative Of the applicant had stated that by virtue of the statutory provisions, the applicant is entitled to get the input tax on the capital goods held during the transition period. As per Section 140(3) of the GST Act, 2017 a registered person, who was not liable to be registered under the existing law or who was engaged in the sale of exempted goods or tax free goods, by whatever the name called, or goods which have suffered tax at the first point of their sale in the State and the subsequent sales of which are not subject to tax in the State under the existing law but which are liable to tax under this Act or where the person w ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... input tax credit not admissible under the existing law is also ineligible for input tax credit under GST Act. Section 140(2) of the Act covers transitional credit claim on capital goods by a dealer registered in the earlier law. Section 140(3) of the GST Act covers "credit of eligible duties in respect Of inputs held on stock and inputs contained in semi finished or finished goods held in stock on the appointed day", hence the transitional credit claim of the tax payer in respect of capital goods is not acceptable. 7. Based on the above deliberations, the Advance Ruling Authority ruled vide paper read 1 st above that; i) The computers, laptops etc., used by the applicant for providing output service would not qualify as inputs for the purpose of availing transitional ITC under Section / 140(3) of KSGST Act, 2017; ii) The goods even though physically available as closing stock as on 30th June, 2017, ITC is not eligible for the VAT paid. 8. Aggrieved by the said Advance ruling, the appellant preferred appeal vide paper read 2nd above, before the Appellate Authority for Advance Ruling. The appellant has stated that the Kerala Authority for Advance ruling has grossly erred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f their sale in the State and the subsequent sales of which are not subject to tax in the State under the existing law but which are liable to tax under this Act or where the person was entitled to the credit of input tax at the time Of sale of goods, if any, shall be entitled to take, in his electronic credit ledger, credit of the value added tax and entry tax in respect of inputs held in stock and inputs Contained in semi-finished or finished goods held in stock on the appointed day subject to the following conditions, namely:- (i) such inputs or goods are used or intended to be used for making taxable supplies under this Act; (ii) the said registered person is eligible for input tax credit on such inputs under this Act; (iii) the said registered person is in possession of invoice or other prescribed documents evidencing payment of duty under the existing law in respect of such inputs; (iv) such invoices or other prescribed documents were issued not earlier than twelve months immediately preceding the appointed day. 11. As per Section 2(59) of the Act, "input" means any goods other than capital goods used or intended to be used by a supplier in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f the Act. They have prayed that the Appellate Authority may consider the above submissions and set aside the impugned Advance Ruling and pass such orders as may be deemed fit and proper in facts and circumstances of the case. DISCUSSION AND FINDINGS 13. The authorized representative of the appellant was heard. During the persona] hearing, the. authorized representative. reiterated the contentions raised in the grounds of appeal and further expressly deposed as follows: The issue in the present case is with respect to eligibility to avail transitional credit of Kerala VAT paid by a service provider prior to CST on goods which are tying on stock as on 30.06.2017. In this regard it was submitted that Section 2(S9) of the Kerala GST Act defines inputs as any goods other than capital goods used by a supplier in the course or furtherance Of business. Explanation to Section 142 of the Kerala GST Act provides that for the purpose Of transitional provisions, capital goods would have the same meaning assigned to it in the Kerala VAT Act. In the Kerala VAT Act capital goods has been defined to exclude Goods Which are used for rendering services. Since the goods involved are used fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... mputers, Laptops etc., can only be claimed as "Capital Goods" but not as "Inputs." iv) 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. v) Further, 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 Sectio ..... X X X X Extracts X X X X X X X X Extracts X X X X
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