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TMI Blog2019 (10) TMI 786X X X X Extracts X X X X X X X X Extracts X X X X ..... der the "GST Act". * The issue raised by M/s. Parmod Kumar Singala, Chak 3 RTP, Tibbi Road, Sangaria Hanumangarh, Rajasthan 335063 (hereinafter the applicant) is fit to pronounce advance ruling as it falls under the ambit of the Section 97 (2) (d) & (e) given as under: 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; Further, the applicant being a registered person (GSTIN is 08AFEPS8987D1ZT as per the declaration given by him in Form ARA-01) the issue raised by the applicant is neither pending for proceedings nor proceedings were passed by any authority. Based on the above observations, the applicant is admitted to pronounce advance ruling. 1. SUBMISSION AND INTERPRETATION OF THE APPLICANT: * The Applicant is a Proprietorship Firm and is registered under the provisions of Central Goods & Services Tax Act, 2018 read with the provisions of the Rajasthan Goods & services tax Act, 2017 having GSTIN 08AFEPS8987D1ZT. * That the Applicant is engaged in the business of manufacturing and production of Loose Cotton, Cotton Seeds, Cotton Seed Oil and by-product Cotton seed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ces or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person. In view of the above section, the applicant is entitled to take credit of the ITC 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. b. Section 17 (2) of the GST Act, 2017 states that- Where the goods or services or both are used by the registered person partly for effecting taxable supplies including zero-rated supplies under this Act or under the Integrated Goods and Services Tax Act and partly for effecting exempt supplies under the said Acts, the amount of credit shall be restricted to so much of the input tax as is attributable to the said taxable supplies including zero-rated supplies. In view of the above said section, the amount of credit shall be restricted to so much of the input tax is attributable to the said taxable supplies including zero rated supplies. Therefore, the applicant has to reverse the amount of credit used in the manufacture and sell of the product which attracts GST @ 0%. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless,- (a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other taxpaying documents as may be prescribed; (b) He has received the goods or services or both Explanation-for the purposes of this clause, it shall be deemed that the registered person has received the goods or, as the case may be, services- (i) where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise; (ii) Where the services are provided by the supplier to any person on the direction of and on account of such registered person.] (c) subject to the provisions of section 41 [or section 43A], the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilization of input tax credit admissible in respect of the said supply; and (d) He has furnished the return under section ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... services or both are used by the registered person partially for taxable supply including zero rated supply and partially for the exempted supply then in that case the claim of ITC shall be restricted to the extent of taxable supply including zero rated supply. * The applicant has quoted the case of Union of India vs M/s. Hindustan Zinc Ltd, Civil Appeal No. 8621 of 2010 = 2014 (5) TMI 253 - SUPREME COURT where during the production of Zinc the Sulphur is obtained as by-product. The Apex Court made an observation and held that the production of Sulphur is a part of technological necessity during the production of Zinc and no in the world can stop the production of the Sulphur during the production of Zinc. But in the instant case, the context of technological necessity cannot be applied as applicant has moved beyond the ginning and has processed on cotton seed which has yielded cotton seed oil, cotton seed oil cake etc. * The manner of apportionment and determination of ITC is mentioned in Rule 42 of GST Rules, 2017, the relevant extract is reproduced here:- 42. Manner of determination of input tax credit in respect of inputs or input services and reversal thereof.-(l) The i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ation: For the purposes of this clause, it is hereby clarified that the aggregate value of exempt supplies and the total turnover shall exclude the amount of any duty or tax levied under entry 84 of List I of the Seventh Schedule to the Constitution and entry 51 and 54 of List 11 of the said Schedule; (j) the amount of credit attributable to non-business purposes if common inputs and input services are used partly for business and partly for non-business purposes, be denoted as 'D2', and shall be equal to five per cent. of C2; and (k) the remainder of the common credit shall be the eligible input tax credit attributed to the purposes of business and for effecting supplies other than exempted supplies but including zero rated supplies and shall be denoted as 'C3', where,- C3 C2 - (Dl+D2); (l) the amount 'C3' shall be computed separately for input tax credit of central tax, State tax, Union territory tax and integrated tax; (m) the amount equal to aggregate of 'D1' and 'D2' shall be added to the output tax liability of the registered person: Provided that where the amount of input tax relating to inputs or input services used partly for the purposes other than business and ..... 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