TMI Blog2022 (1) TMI 1056X X X X Extracts X X X X X X X X Extracts X X X X ..... ns for taking ITC. It does not impose any restriction on utilisation of the legitimately earned ITC. It does not prescribe that ITC available in electronic credit ledger to be utilized only for the specific outward supply, on whose inputs such ITC was availed - Section 16(1) nowhere mandates to prove one-to-one correlation of particular inputs with particular outward supply. In other words, Section 16(1) does not require that payment of outward tax on particular outward supply can be made only from the ITC taken on particular inputs, which have nexus or connection with that outward supply. The requirement of Section 16(1) is that the inward supply should be used or intended to be used in the course or furtherance of the business of taxpayer. In this case, it is undisputed that the inward supply of Gold and Dore bars are intended to be used in the course of business of the appellant, i.e. outward supply of Bullion etc. This undisputed fact entitled the appellant to take input tax credit on such inputs. Once such input tax credit is validly taken, it can be utilised for payment of output tax [GST] on any taxable or zero rated outward supply of the appellant - the amount of input ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intends to pay GST by utilizing ITC or by cash, if no balance of ITC is available. The appellant also intends to engage in the business of trading of Castor Oil Seeds. The appellant intends to purchase Castor Oil Seeds directly from unregistered Agriculturists without payment of GST. The appellant intends to supply the Castor Oil Seeds in domestic market as well as for export. Such supply of Castor Oil Seeds falling under Chapter Heading 1207 attracts CGST @ 2.5% and SGST @ 2.5% or IGST @ 5%, as per Sr.No. 70 of Schedule-I of the Notification No. 01/2017-Central Tax (Rate) dated 28.06.2017; Sr.No. 70 of Schedule-I of the Notification No. 01/2017-State Tax (Rate) dated 30.06.2017; and Sr.No. 70 of Schedule-I of the Notification No. 01/2017-Integrated Tax (Rate) dated 28.06.2017 respectively. No ITC on inward supply of Castor Oil Seeds is available. The appellant intends to utilise ITC taken on inward supply of Gold Silver Dore / articles and lying in balance, for the purpose of payment of GST on their outward supply of Castor Oil Seeds. 3. As the inward supply and outward supply of Gold Silver bullion attracts the same rate of GST, the question arises as how there can be a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d person shall, subject to such conditions and restrictions as may be prescribed 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. This means that, for the applicant, to be eligible to take input tax credit on any supply of goods or services, the same has to be used or should be intended to be used in the course or furtherance of his business i.e. the nexus/connection between the inputs and the final products manufactured from these inputs is required to be proved. For example, inputs such as dores of gold, silver etc. procured by the applicant are used in the manufacture of their final product i.e. Gold (including Gold Plated with Platinum) unwrought or in semi-manufactured forms or in powder form, based metal clad with silver, not further worked than semimanufactured, coin etc. It can, therefore, be derived from the above that the aforementioned inputs are used in the course or furtherance of their business i.e. supply of Gold, Gold plated with platinum etc. In this context, even a layman can make out that d ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e or furtherance of the business of supply of Castor oil seeds. In view of the facts mentioned above, and the non-submission of the aforementioned document/literature as mentioned above, by the applicant, we conclude that the applicant is not eligible to utilise the input credit available in their Electronic Credit Ledger (earned on the inputs/raw-materials/inward supplies meant for outward supply of Bullions) for payment of GST liability on supply of Castor oil seeds. UNQUOTE After observing as above, the Gujarat Authority for Advance Ruling has passed the Ruling to the effect the applicant cannot use the ITC legitimately earned on inward supplies (like Gold Silver Dore bars etc.) towards payment of GST on their outward supply of Castor Oil Sees. 5. M/s. Aristo Bullion Pvt. Ltd. has filed an appeal with us against the aforesaid Ruling under the provisions of Section 100 of the CGST and GGST Acts, 2017. In the Grounds of Appeal, the appellant has inter alia submitted that the Authority for Advance Ruling has erred in ruling that they have to prove the nexus or connection between the accumulated ITC and Castor Oil Seeds. The appellant has reproduced the provisions ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Tax Liability. 5.5 The appellant submitted that it does not fall under the category of Blocked credit or Restricted credit in terms of Section 17 of CGST Act 2017. In accordance to Section 49(4) of CGST Act 2017, the appellant firmly submitted that there is no restriction to utilise the accumulated Input Tax Credit lying in the Electronic Credit Ledger towards any payment of Output Tax Liability. The appellant does not require to prove any sort of nexus between input output for the purpose of utilisation of input tax credit. 6. Vide email dated 15.07.2021, M/s. A. D. S. Sheth Co., Chartered Accounts, on behalf of the appellant, has sent following submissions: 6.1 In the instant case, Authority for Advance Ruling, Gujarat tends to unsettle the settled principle that the input tax credit of various inputs and input services pertaining to various business of the assessee is available as common pool which can be utilized towards discharge of outward tax liability for supply of any goods or services. 6.2 It is very common that an assessee is engaged in supply of goods and services which are registered under one GSTIN and there is practically no need to maintain separate ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 41 G.S.T.L. 520 (TRI. - BANG.) Pipavav Shipyard Ltd. v. CCE ST [2016] 67 taxmann.com 354 (Ahd. CESTAT) Nitin Spinners Ltd. v. CCE [Final Order No. 54612 of 2016, dated 24-102016] Entraco Power Systems (P.) Ltd. v. CCE [2017] 3 G.S.T.L. 129 (TRI. MUMBAI) CCE v. Graphite India Ltd. [2017] 3 G.S.T.L. 505 (TRI. MUMBAI)] Coca Cola India Pvt. Ltd. v. Commissioner of Central Excise, Pune-III -Order dated 26.08.2009 of Bombay High Court in C.Ex. Appeal No. 118 of 2007 [2009 (242) ELT 168 (Bom.)] CCE, Coimbatore v. Lakshmi Technology and Engineering Industries Ltd. - Final Order No. 297/2011 dated 10.02.2011 of CESTAT, Chennai in Appeal No. ST/589/2010 [2011 (23) STR 265 (Tri-Chennai)] 6.5 The appellant submitted that when the issue as regards the fact that no one to one co-relation is required between inputs/input services and the final product/services was settled by various Tribunals in the erstwhile regime, reviving the said dispute in the GST era does not seem to be a lucrative affair, particularly, the GST Law was introduced with the motto of 'seamless flow of input tax credit'. 6.6 The appellant further sub ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , as under: Section 16. Eligibility and conditions for taking input tax credit - (1) Every registered person shall, subject to such conditions and restrictions as may be prescribed 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. In this case, the inputs like Gold and Silver Dore bars, etc. are undisputedly intended to be used in the course or furtherance of the business of the appellant. Therefore, input tax credit of GST paid on such inputs would be admissible subject to conditions and restrictions, as prescribed. 11. Sub-section (5) of Section 17 prescribes that notwithstanding anything contained in sub-section (1) of section 16 and sub-section (1) of section 18, input tax credit shall not be available in respect of the specified supplies like motor vehicles for transportation of not more than thirteen persons, etc., as listed therein. After reproducing the provisions of Section 17(5), the GAAR has obse ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... es not prescribe that ITC available in electronic credit ledger to be utilized only for the specific outward supply, on whose inputs such ITC was availed. 15. We find that Section 16(1) nowhere mandates to prove one-to-one correlation of particular inputs with particular outward supply. In other words, Section 16(1) does not require that payment of outward tax on particular outward supply can be made only from the ITC taken on particular inputs, which have nexus or connection with that outward supply. Therefore, we set aside the observation made by the GAAR to the effect, It can therefore, be seen that even the basic conditions envisaged in the provisions of Section 16(1) have not been fulfilled in the instant case. [Para 12 of Ruling refers]. We find that the requirement of Section 16(1) is that the inward supply should be used or intended to be used in the course or furtherance of the business of taxpayer. In this case, it is undisputed that the inward supply of Gold and Dore bars are intended to be used in the course of business of the appellant, i.e. outward supply of Bullion etc. This undisputed fact entitled the appellant to take input tax credit on such inputs. Once suc ..... X X X X Extracts X X X X X X X X Extracts X X X X
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