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TMI Blog2023 (9) TMI 852X X X X Extracts X X X X X X X X Extracts X X X X ..... h CGST Act and TGST Act. 3. It is observed that the queries raised by the applicant fall within the ambit of Section 97 of the GST ACT. The Applicant enclosed copies of challans as proof of payment of Rs. 5,000/- for SGST and Rs. 5,000/- for CGST towards the fee for Advance Ruling. The Applicant has declared that the questions raised in the application have neither been decided by nor are pending before any authority under any provisions of the GST Act. The application is therefore, admitted. 4. BRIEF FACTS OF THE CASE: The applicant M/s. Geekay Wires Limited is engaged in the business of manufacturer of Steel Nails and other steel products in its manufacturing unit situated at Shankarampet-R, Village, Shankarampet- R Mandal-Medak, Medak, Telangana. The raw materials for manufacturing Steel Nails are Steel Wire rod. The applicant purchases steel wire rods and draw it to required sizes and then in Nail making machine make Steel nails of different sizes. The other major inputs for manufacturing Nails are Polypropylene, Copper wire, Paper tape and packing material like cartons, pallets etc...The applicant purchases these raw materials from the other registered taxable persons withi ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ons 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 business and the said amount shall be credited to the electronic credit ledger of such person. 2. That as per the above provision under the CGST Act, a registered person is entitled to take input tax credit on the goods used or intended to be used in the course of business. In the case of the applicant, the goods/service received from registered taxable persons are already used in the manufacturing process and new commercial commodity is emerged than the different inputs used in such manufacturing activity. These inputs and input services are not destroyed in the fire accident as already by the time of fire accident they are used in the manufacturing of finished goods and lost their identity. The relevant expenditure is then business expenditure. 3. That according to Section 17 (5) (h) of the CGST Act, input tax credit shall not be available in respect of the goods lost, stolen, destroyed, written off or disposed of way by of gif ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... onsidered i.e. ITC can be denied only on those specific goods on which credit is taken. Once the goods on which credit is taken are consumed in the final product and lose their identity, then, ITC reversal cannot be demanded. 9. That accordingly, it can be said that the ITC restriction does not extend itself to inputs contained in the finished goods after being put to use. 10. That a similar interpretation was taken by the Maharashtra Authority for Advance Ruling in General Manager Ordnance Factory Bhandara, 2019 (26) G.S.T.L. 423 (A.A.R. GST), where it was held that "where inputs are used, they cease to -- exist and they being destroyed, lost or stolen will not arise. Therefore, once the inputs are used in manufacture of final products, which are then sent for testing purposes, then in such a case the said inputs cannot be considered to have been destroyed." 11. That when inputs are properly/fully utilized in the manufacturing of finished goods, the same cease to exist and thus, credit availed on said inputs is not required to be reversed in the event of destruction of finished goods in fire. 12. That when the finished goods are destroyed in fire accident and the destroyed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ust be found by reading the statute as a whole. This rule referred to as "elementary rule" was followed in many national and international cases. It is spoken of construction 'ex visceribus actus' i.e., every part of the statute must be construed within the four corners of the Act. In this context the legislative intent for allowing input tax credit under Section 16 has to be gathered from the conditions under which restrictions to claim the same arise under Section 17 of the CGST Act, 2017. Section 17(2) of the CSGT Act, 2017 concludes with the clause "The amount of credit shall be restricted to so much of input tax as is attributable to the taxable supplies including zero-rated supplies". Therefore the input tax credit on the purchases made in the context of Section 17(2) has to be restricted to the taxable supplies only. This Section is further buttressed by Section 18(4) where in the condition of debiting or paying back the input tax already claimed is clearly enumerated. The sub-section is abstracted hereunder. "(4) Where any registered person who has availed of input tax credit opts to pay tax under section 10 or, where the goods or services or both supplied by him become ..... X X X X Extracts X X X X X X X X Extracts X X X X
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