TMI Blog2019 (9) TMI 1120X X X X Extracts X X X X X X X X Extracts X X X X ..... plies. In other words, subject to the provisions under rule 42(2) of the GST Rules, the entire input tax on input services is an admissible credit during 2018-19 - It is presumed that the Applicant does not make any exempt supplies other than the ones it manufactures. Based on the proviso to rule 43(1)(d) of the GST Rules and further prescriptions under rule 43(1)(e), (f) and (g) of the GST Rules, the Applicant is required to compute the admissible amount of the input tax credit on the capital goods used for both taxable and exempt supplies in the tax periods over the useful life of such capital goods, calculated from the date of invoice. The Applicant shall reverse the balance amount of the input tax on the said capital goods that has a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... assi. Some of the goods are taxable, and others exempted under the GST Act. Commercial production of UHT milk has been going on since December 2018. Manufacture of other products is likely to begin soon. The Applicant has procured capital goods and input services that are common to the production of both taxable and exempted goods. The Applicant wants to know to what extent and in what proportion the input tax credit is admissible on such capital goods and input services. An advance ruling is acceptable on this question under section 97(2)(d) of the GST Act. 1.2 The Applicant also declares that the issues raised in the application are not pending nor decided in any proceedings under any provisions of the GST Act. The officer concer ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... financial year to which such credit relates. 2.3 In the Applicant s case, the commercial production of taxable goods started in December 2018. The commercial production of the exempt goods did not begin in 2018-19. The Applicant should, therefore, be eligible for credit of the entire input tax on input services. 3. Submissions of the Revenue 3.1 The concerned officer from the Revenue submits that apportionment of the input tax credit on the capital goods used for manufacture of both the taxable and the exempted goods should be made in the manner prescribed under proviso to rule 43(1)(d) of the GST Rules and other related clauses of rule 43(1). The Applicant purchased capital goods that were used for producing ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... hanism for apportionment of input tax credit on capital goods that were used for manufacturing taxable goods but are going to be used subsequently for production of both taxable and exempted goods. The amount of input tax on each of such capital goods shall be credited to the electronic credit ledger in terms of rule 43(1)(c) of the GST Rules, which also prescribes sixty months from the date of invoice as the useful life of such capital goods. Rule 43(1) provides the mechanism for apportionment of the input tax available in the corpus Tc over the balance period of the useful life. 4.2 The Applicant is required to furnish the details of inward supply of goods or services, including that of capital goods, received during a tax period ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... x period. 4.4 In the Applicant s case, the commercial production of taxable goods started in December 2018. The commercial production of the exempt goods did not begin in 2018-19. The value of D1f therefore, is zero during the tax periods in 2018-19. No amount of the common credit of input tax on input services available during 2018-19 should, therefore, be attributed towards exempt supplies. In other words, subject to the provisions under rule 42(2) of the GST Rules, the entire input tax on input services is an admissible credit during 2018-19. 4.5 It is presumed that the Applicant does not make any exempt supplies other than the ones it manufactures. In view of the foregoing, we rule as under RULING ..... X X X X Extracts X X X X X X X X Extracts X X X X
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