TMI Blog2019 (7) TMI 40X X X X Extracts X X X X X X X X Extracts X X X X ..... on for advance ruling is rejected, being non-maintainable. - GST-ARA-108/2018-19/B-36 - - - Dated:- 8-4-2019 - SHRI B. TIMOTHY, AND SHRI B.V. BORHADE, MEMBER PROCEEDINGS (Under section 98 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017) The present application has been filed under section 97 of the Central Goods and Services Tax Act, 2017 and the Maharashtra Goods and Services Tax Act, 2017 [hereinafter referred to as the CGST Act and MGST Act respectively] by M/s. Bauli India Bakes and Sweets Private Limited , seeking an advance ruling in respect of following questions. 1. Whether the input tax credit availed by the applicant in respect of capital goods received prior to 01 July 2017 is admissible to the applicant? 2. Whether while determining the liability to pay tax on the outward supplies made by the applicant, the applicant can adjust the input tax credit in respect of the capital goods procured by it prior to 01 July 2017? At the outset, we would like to make it clear that the provisions of both the CGST Act and the MGST Act are the same except for certain ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... No. 1/2017-Central Tax (Rate) dated 28 June 2017. 1.8 Considering the fact that the final products of Bauli are now liable to GST it wishes to understand whether the CENVATABLE duties namely Central Excise Duty, CVD or SACD paid on such capital goods prior to the GST Regime could be availed as input tax credit under the CGST Act 2017. 1.9 Bauli wishes to make a detailed submission herein below to demonstrate its eligibility for availing such credit of the capital goods procured prior to the GST regime and requests an advance ruling to be pronounced in relation to the same. STATEMENT CONTAINING APPLICANT S INTERPRETATION OF LAW IN RESPECT OF THE QUESTION RAISED IN ANNEXURE -1 1. ADMISSIBILITY OF INPUT TAX CREDIT IN REPSECT OF CAPITAL GOODS PROCURED UNDER PRE-GST REGIME In the present case it is important to note that the capital goods in question were received by the Applicant prior to GST Regime upon payment of applicable Central Excise/Customs Duties. Considering the above facts, it would be relevant to examine the provisions of Rule 6(4) of the CENVAT Credit Rules, 2004 (hereinafter referred to as CCR ). 1.1 Rule 6(4) o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... NVAT credit which stands determined at the time the capital goods were received. [Copy of the above case-law is attached herewith and marked as Exhibit B ] 1.1.6 Similar view was taken by Hon ble Mumbai Tribunal in the case of Spenta International Limited = 2007 (8) TMI 25 - CESTAT, MUMBAI wherein the Larger Bench held that to determine as to whether the capital goods are used exclusively for manufacture of exempted products or not, the date of receipt should be considered. Hence, it was held that the test of eligibility of CENVAT Credit in respect of the capital goods has to be determined at the time of its usage. [Copy of the above case-law is attached herewith and marked as Exhibit C ] 1.1.7 Thus, the aforementioned provision was causing hardship to the taxpayers. Typically, capital goods involve huge investment and there were cases where such capital goods were subsequently used for manufacture of dutiable goods. Hence, to extend the benefit to such manufacturers Rule 6(4) was amended to bring benevolent provision for the advantage of the manufacturers. 1.1.8 Subsequently, rule 6(4) of the CCR was amended by the Fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d be paid by the Applicant. 1.1.12 Basis the above, an analogy could also be drawn that as per Rule 6(4) an assesse is eligible to avail CENVAT credit on capital goods within two years from the date as provided therein. However, the credit will become available for use on the date when the output produced from such capital goods becomes dutiable or it is used in the manufacture of dutiable final products. 1.1.13 Hence, CENVAT Credit in respect of such capital goods is admissible under CCR if the capital goods are used in the manufacture of dutiable/taxable goods within the period of 2 years. 1.1.14 However, since the final products in the present case have become taxable in the GST regime, it would be important to examine whether the above benefit or right granted under the CCR survives under the GST Regime. In this regard it would be important to understand the provisions contained in the repeals and saving clause contained in the GST regulations. 2. REPEAL SAVING CLAUSE 2.1 Section 174 of the CGST Act lays down the law in this regard i.e. the law related to repeal and saving? The saving clause of the GST Legislation vide section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... enforcement of such rights and liabilities. 2.4 Further, the savings of rights and liabilities is in respect of those rights and liabilities which were acquired or incurred under a repealed statute and not under the general law which is modified by a statute. The distinction between what is and what is not a right is often the subject of distinct judicial interpretations. In the case of Gajraj Singh vs. State Transport Appellate Tribunal = 1996 (9) TMI 607 - SUPREME COURT , the Hon ble Supreme Court held as under: What is unaffected by the repeal of a statute is a right acquired or accrued under it and not a mere hope or expectation of or liberty to apply for, acquiring a right. [Copy of the above case-law is attached herewith and marked as Exhibit D ] 2.5 In the instant case, CENVAT credit is a right conferred upon the taxpayer by law i.e. a right acquired or accrued under law, and it is not mere hope or expectation of acquiring any right. The said right was made available to manufacturers under the erstwhile Central Excise Regime. In a number of cases the Courts have held that CENVAT credit is the right of the taxpayer. Attent ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3. ADMISSIBILITY OF CREDIT UNDER SECTION OF THE ACT WHERE AN EXEMPT SUPPLY SUBSEQUENTLY BECOMES A TAXABLE SUPPLY 3.1 Attention is invited to the provision of section 18(1)(d) of the CGST Act which reads as under: Where an exempt supply of goods or services or both by a registered person becomes a taxable supply, such person shall be entitled to take credit of input tax in respect of inputs held in stock and inputs contained in semi-finished or finished goods held in stock relatable to such exempt supply and on capital goods exclusively used for such exempt supply on the day immediately preceding the date from which such supply becomes taxable : Provided that the credit on capital goods shall be reduced by such percentage points as may be prescribed 3.2 The above provision clearly indicates that credit of capital goods acquired (in the GST Regime) initially for manufacturing exempted goods which later on become taxable is available as credit with appropriate reduction. Though the above provision would apply in the context of capital goods acquired in the GST regime yet, the same analogy would also be equally applicable in the case ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , pertains to the pre GST Regime, since the commodity is exempt in the pre GST regime, Cenvat Credit was not allowed on capital goods used in manufacture of exempted goods. Hence ITC in respect of capital goods procured in pre GST regime can not granted 04. HEARING Preliminary hearing in the matter was held on 07.02.2019. Sh. Nitin S. Shah, Advocate, appeared and requested for admission of their application. Jurisdictional Officer Ms, Rupali Mahadik, Dy. Commr. of State Tax (E-616) Pune division, Pune, appeared but did not make any written submissions. The application was admitted and called for final hearing on 06.03.2019. Sh. Nitin S. Shah Advocate, appeared, made oral and written submissions. Jurisdictional Officer Ms. Rupali Mahadik, Dy. Commr. of State Tax (E-616) Pune division, Pune, appeared requested that she may be allowed to submit written contention within 8 days. We heard both sides. 05. OBSERVATION AND FINDINGS: We have gone through the facts of the case and written submissions made by applicant and jurisdictional officer on record. The issue put before us is in respect of applicability of input tax cred ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Ruling under the provisions of the GST Act. Sub-section (2) of section 97 is the relevant section which is reproduced as below: (2) The question on which the advance ruling is sought under this Act, shall be in respect of,- a. classification of any goods or services or both; b. applicability of a notification issued under the provisions of this Act; c. determination of time and value of supply of goods or services or both; d. admissibility of input tax credit of tax paid or deemed to have been paid; e. determination of the liability to pay tax on any goods or services or both; f. whether applicant is required to be registered, g. whether any particular thing done by the applicant with respect to any goods or services or both amounts to or results in a supply of goods or services or both, within the meaning of that term. We observe in the instant case having regard to the nature of transaction the questions which are being contested are not about - i. the classification of any goods or services or both. ii. the applicability of a notification issued under the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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