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TMI Blog2022 (1) TMI 1056X X X X Extracts X X X X X X X X Extracts X X X X ..... bility on 'Castor Oil Seed' which were procured from Agriculturists and subsequently meant for onward supply. Being aggrieved, the appellant (who was 'applicant' before GAAR) has filed this appeal before us under the provisions of Section 100 of the Central Goods and Services Tax Act, 2017 and Gujarat Goods and Services Tax Act, 2017 ['CGST Act' and 'GGST Act' for short]. 2. The Appellant intends to engage in manufacturing as well as trading of Gold & Silver Bullion including Coins, etc. These activities require Gold & Silver Dore which may be procured domestically or imported as raw materials, on payment of appropriate GST. On outward supply of Gold & Silver items, the appellant 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... GAAR also referred provisions of Section 17(5) ibid, which provisions exclusions on which input tax credit is not available. After referring these provisions, the GAAR has observed and held as follows (underline supplied): QUOTE 11. On going through the provisions of Section 17(5) as mentioned herein above, we find that the inputs i.e. gold dores and silver dores on which the applicant intends to avail input credit are not covered under the excluded provisions of the said section. Further, on going through the provisions of the Section-16 as mentioned above, we find that sub-section (1) specifically mentions that the 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. 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 inpu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urtherance 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 dores with the business of supply of Castor oil seeds by the applicant. 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 and we can therefore, undoubtedly conclude that the aforementioned inputs are not used or intended to be used in the course 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ng in the Electronic Credit Ledger towards the output tax liability arising out of trading of Castor Oil Seeds. In other words, the Input Tax Credit lying as balance be available for adjustment towards the output tax liability under the GST Acts. 5.4 Once the Input Tax is credited to the Electronic Credit ledger in terms of Section 49(2) & (4) of CGST Act 2017, it does not contain any identification for utilizing of such Input Tax Credit. Therefore, there is no requirement under the GST Law to prove the nexus between input & output for the purpose of utilisation of Input Tax Credit towards payment of Output 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. She ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... milar issue was considered before the Tribunals wherein the utilisation of credit availed in the capacity of manufacturer towards discharge of service tax liability was questioned by departmental authorities. The appellant contended that it was held by various Tribunals that the cenvat credit is available as common pool which can be either utilized for payment of central excise duty or service tax and there is no need to prove nexus of credit with the final liability discharged by the assessee. The appellant relied upon following judicial pronouncements:- ♦ Tally Solutions (P.) Ltd. v. CCE [2020] 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 3/2020 read with CBIC Circular No. 157/13/2021-GST dated 20.07.2021. FINDINGS: 9. We have carefully gone through the written and oral submissions made by or made on behalf of the appellant and the Ruling passed by the Gujarat Authority for Advance Ruling. The only question involved in this appeal is as to whether Input Tax Credit validly taken on any 'input' can be utilized for payment of 'output tax' (GST) on any outward supply, which has no nexus with the inputs on which ITC was taken. 10. Before stating discussion, we reproduce the provision of Section 16(1) of the CGST Act, 2017, 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 cours ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... t ITC taken on which particular input has been utilised. Thus, we do not agree with the Ruling passed by the Gujarat Authority for Advance Ruling in this case. 13. Though there is no nexus of the inputs like Gold & Silver Dore bars with outward supply of Castor Oil Seeds, there is a nexus of the said inputs with taxable outward supply of Bullion / various forms of Gold & Silver. 14. We note that Section 16(1) of the CGST Act only states the eligibility and conditions 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. 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 ba ..... X X X X Extracts X X X X X X X X Extracts X X X X
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