2019 (7) TMI 40 - AAR - GST

GST Ruling: Input Tax Credit for Capital Goods Received Pre-GST Rejected for Lack of Jurisdiction

In Re: Bauli India Bakes and Sweets Private Limited

The application for advance ruling regarding the admissibility of input tax credit for capital goods received before the GST regime was rejected as the ... Maintainability of Advance Ruling application - scope of advance ruling - Input tax credit - capital goods received prior to 01 July 2017 - outward supplies - adjustment of input tax credit in respect of the capital goods procured by it prior to 01 July 2017 - HELD THAT:- From the collective readings of provisions viz. - Clause (63) and (62) of Section 2 of the CGST Act that, the question enumerated at (d) of Section 97(2), does not deal with the admissibility of the credit of taxes paid other than the taxes mentioned in the Clause (62) of Section 2 of the CGST Act, 2017, which has been cited herein above - Section 97(2), which encompasses the questions, for the ruling by the AAR does not deal with the input tax credit of the service tax or VAT paid under the erstwhile laws. Since the Appellant has raised questions on the admissibility of the credit of the CENVAT paid, under the pre-GST regime, on capital goods, it is held that this authority does not have jurisdiction to pass any ruling on such matters. The application for advance ruling is rejected, being non-maintainable. Issues Involved:1. Admissibility of input tax credit for capital goods received prior to 01 July 2017.2. Adjustment of input tax credit for capital goods procured before 01 July 2017 against tax liability on outward supplies.Issue-wise Detailed Analysis:1. Admissibility of Input Tax Credit for Capital Goods Received Prior to 01 July 2017:The applicant, M/s. Bauli India Bakes and Sweets Private Limited, sought an advance ruling on whether the input tax credit (ITC) availed in respect of capital goods received before 01 July 2017 is admissible. The applicant argued that under Rule 6(4) of the CENVAT Credit Rules, 2004 (CCR), credit on capital goods used exclusively for the manufacture of exempt goods was not available. However, if such goods became dutiable within two years, the credit would be admissible. The applicant contended that since their final products became taxable under GST from 01 July 2017, they should be eligible for ITC on capital goods received before this date.They further referenced Section 174 of the CGST Act, which contains repeal and saving clauses, asserting that rights, privileges, obligations, or liabilities acquired under the repealed acts should not be affected by the introduction of GST. The applicant also cited Section 18(1)(d) of the CGST Act, which allows ITC on capital goods used for exempt supplies that later become taxable, arguing that this provision should apply to their case.The concerned officer, however, submitted that under Section 18(1)(d) of the CGST Act, ITC was not allowed on capital goods used in the manufacture of exempt goods in the pre-GST regime, and hence, ITC on such capital goods cannot be granted.Upon review, the authority observed that the applicant's questions pertained to the admissibility of ITC on capital goods procured before the GST regime, which is not covered under Section 97(2) of the CGST Act. The authority emphasized that the definition of 'input tax' under Section 2(62) of the CGST Act pertains to taxes paid under the GST regime and does not include taxes paid under the erstwhile laws. Consequently, the authority concluded that it did not have jurisdiction to pass a ruling on the admissibility of CENVAT credit for taxes paid under the pre-GST regime.2. Adjustment of Input Tax Credit for Capital Goods Procured Before 01 July 2017 Against Tax Liability on Outward Supplies:The applicant also sought clarification on whether they could adjust the ITC for capital goods procured before 01 July 2017 against their tax liability on outward supplies. The authority reiterated that the questions raised by the applicant were not maintainable under Section 97(2) of the CGST Act, as they pertained to the admissibility of CENVAT credit under the pre-GST regime, which falls outside the scope of the GST Act.In conclusion, the authority rejected the application for advance ruling, stating that it was non-maintainable because the questions raised did not fall within the jurisdiction of the authority under the GST Act.Order:For reasons discussed, the application for advance ruling is rejected, being non-maintainable.