TMI Blog2021 (4) TMI 561X X X X Extracts X X X X X X X X Extracts X X X X ..... t further worked than semi-manufactured, coin etc. The core issue is that the applicant wants to trade in Castor oil seeds on which the GST liability is 5% and wants to utilise the input tax credit (availed on inputs such as gold dores, silver dores etc.) available with him in his electronic credit ledger for the payment of the said GST. However, for the applicant, to be eligible to avail the input tax credit for the payment of the GST leviable on the Castor oil seeds which they intend to supply domestically or to export it, the applicant has to first prove the nexus or connection between the inputs and the castor oil seeds which he intends to supply, in the terms of sub-section(1) of Section 16 of the CGST Act, 2017 i.e. he has to prove as to how the gold dores or silver dores are used or intended to be used in the course or furtherance of his business of supply of Castor oil seeds. In this regard, firstly, the applicant has not submitted any document/literature etc. in respect of how they wish or intend to carry out the business of supply of castor oil seeds. Secondly, they have not provided/submitted any proof in respect of the input-final product nexus/connection in respe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... they will also avail input tax credit of GST paid on the goods procured domestically as well as from overseas market and the applicant will have to discharge GST on their outward supplies at applicable rate; that the said taxes will be discharged through Electronic Credit Ledger as well as through Electronic Cash Ledger in the case if balance available in Electronic Credit Ledger is not adequate. 2. The applicant has submitted that they also intend to procure Castor oil seeds directly from the Agriculturists who produce the same in their farms and after procuring the said Castor oil seeds they intend to supply in the Domestic market as well as intend to export the same; that as per their understanding, as of now Agriculturists are not required to obtain registration under Section 23 of the CGST Act, 2017; that Castor oil seeds is also not covered in the Notification No.4/2017-Central Tax issued under Section 9(4) of the CGST Act, 2017 as amended from time to time as is evident from the following table S.No. Tariff item, sub-heading, heading or Chapter Description of supply of Goods Supplier of ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... iable to GST either in the hands of the Agriculturists under Section 9(1) of CGST Act, 2017 or in the hands of Recipient of the Castor oil seeds procured from the unregistered person under Section 9(4) of the CGST Act, 2017, hence the question of availing input tax credit does not arise on such purchase; that as mentioned in the preceding para, the applicant intends to trade in Castor oil seeds (HSN Code 1207) and it is the applicant s understanding that they are not falling under the exempted category and hence they are therefore liable to discharge GST in terms of Section 9(1) of the CGST Act, 2017 read with Notification No.01/2017-Central Tax(Rate), in terms of Schedule-I, Sr.No.70 of Notification No.01/2017-Integrated Tax(Rate) for Inter-state supply @5%; that the said notification does not stipulate that tax so payable is without input tax credit; that in other words when the applicant procures Castor oil seeds it does not attract GST; that however, it attracts GST when it is supplied by the applicant; that simultaneously, the applicant is having input tax credit earned on the inward supply viz. Gold meant for manufacture and its supply gold semi-finished silver etc. out of un ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on vide their letter dated 24.12.2020 stating that during the course of personal hearing, the Hon ble Advance Ruling Authority had asked them to submit a note on the business understanding and the reasons for accumulation of input tax credit and accordingly they have submitted the details as under: 1. Business Plan. M/s Aristo Bullion Private Limited, plan to engage in two types of business as under: (i) To import the bullions (HSN 7IO817106) on payment of IGST (3%at present). The Bullion so received will be refined and thereafter the same will be sold in to domestic market to various buyers on payment of GST at applicable rates (3% at present). Further we may also domestically trade in bullion to take the advantage of price fluctuations. (ii) We intend to procure Castor oil seeds (HSN l207) from agriculturist (not liable to be registered u/s 23 of CGST/SGST Act, 2Ol7), and will be selling in the Domestic Market to the buyer [Trading Activities]. No ITC will be available on procurement of Castor oil seeds as the same will be procured from the agriculturist. Whereas the sale will attract GST @ 5% on sale. 2. Reasons for accumulation of ITC. 1. Th ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Platinum) unwrought or in semi-manufactured forms or in powder form, based metal clad with silver, not further worked than semi-manufactured, coin etc and GST will be discharged on their outward supplies at applicable rate through Electronic Credit Ledger as well as through Electronic Cash Ledger in the case if balance available in Electronic Credit Ledger is not adequate. (ii) They intend to procure Castor oil seeds directly from the Agriculturists who produce the same in their farms and after procuring the said Castor oil seeds, they intend to supply in the Domestic market as well as intend to export the same and the GST on these castor oil seeds is 5% in terms of Schedule-I, Sr.No.70 of Notification No.01/2017-Central Tax(Rate). (iii) No input tax credit is available on procurement of castor oil seeds since the provisions of Section 9(4) of the CGST Act, 2017 and Section 5(4) of the IGST Act, 2017 are not operative and therefore not attracting GST on the supply of goods received by the Registered person from the unregistered person(in this case, the Agriculturist), and therefore they are not availing any input tax credit on procurement of such Castor oil seeds from Ag ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... scribed and in the manner specified in section 49, be 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 and the said amount shall be credited to the electronic credit ledger of such person. (2) Notwithstanding anything contained in this section, no registered 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 tax paying 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nancial year 2017-18, the details of which have been uploaded by the supplier under sub-section (1) of section 37 till the due date for furnishing the details under sub-section (1) of said section for the month of March, 2019. Section 17(5) of the CGST Act, 2017 reads as under: (5) Notwithstanding anything contained in sub-section (1) of section 16 and subsection (1) of section 18, input tax credit shall not be available in respect of the following, namely:- (a) motor vehicles for transportation of persons having approved seating capacity of not more than thirteen persons (including the driver), except when they are used for making the following taxable supplies, namely:- (A) further supply of such motor vehicles; or (B) transportation of passengers; or (C) imparting training on driving such motor vehicles; (aa) vessels and aircraft except when they are used (i) for making the following taxable supplies, namely:- (A) further supply of such vessels or aircraft; or (B) transportation of passengers; or (C) imparting training on navigating such vessels; or (D) imparting training on flying such aircraft; (ii) for transpor ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, to the extent of capitalisation, to the said immovable property; (e) goods or services or both on which tax has been paid under section 10; (f) goods or services or both received by a non-resident taxable person except on goods imported by him; (g) goods or services or both used for personal consumption; (h) goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples; and (i) any tax paid in accordance with the provisions of sections 74, 129 and 130. (6) The Government may prescribe the manner in which the credit referred to in sub-sections (1) and (2) may be attributed. Explanation . For the purposes of this Chapter and Chapter VI, the expression plant and machinery means apparatus, equipment, and machinery fixed to earth by foundation or structural support that are used for making outward supply of goods or services or both and includes such foundation and structural supports but excludes- (i) land, building or any other civil structures; (ii) telecommunication towers; and (iii) pipelines laid outside the factory premises. 11. On going through the provisions of Section 17(5) as mentioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e nexus or connection between the aforementioned inputs and the castor oil seeds which he intends to supply, in the terms of sub-section(1) of Section 16 of the CGST Act, 2017 as discussed above i.e. he has to prove as to how the gold dores or silver dores are used or intended to be used in the course or furtherance of his business of supply of Castor oil seeds. In this regard, we find that firstly, the applicant has not submitted any document/literature etc. in respect of how they wish or intend to carry out the business of supply of castor oil seeds. Secondly, they have not provided/submitted any proof in respect of the input-final product nexus/connection in respect of the inputs i.e. gold and silver dores etc. vis-a-vis Castor oil seeds nor provided any such document/literature in respect of how the inputs i.e. gold dores or silver dores are used or intended to be used in the course or furtherance of their business of supply of Castor oil seeds. Even otherwise, on a plain comparison of the provisions of Section 16(1) of the CGST Act, 2017 with the issue in hand, it can very easily be derived that there is no nexus/connection whatsoever, of the inputs i.e. gold dores or silver d ..... X X X X Extracts X X X X X X X X Extracts X X X X
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