2023 (1) TMI 1165 - AAR - GST

Input Tax Credit Split: Partnership Firm's Mixed Goods Require Proportional Calculation Under CGST Act Section 17

In Re: M/s. Meat Mart Unit of the New Bangalore Ham Shop,

GST Authority ruled on input tax credit for a meat trading partnership firm. The ruling mandated proportionate input tax credit claims for services and ... Percentage of GST input tax - GST paid for the shop on commercial rent to landlord - GST paid on commission to Dunzo and Swiggy for ecommerce online service - GST paid on service charges charged by paytm - GST paid on service charges charged by Banks - Packing material - Printed material - Capital goods like cutting machine, weighing scale, refrigerators, computers and hardware and software goods - GST consequences if goods purchased from unregistered and composition dealers - scope of Advance Ruling. HELD THAT:- The Applicant is into supply of fresh and semi processed meat products like chicken, Mutton, fish, pork and all types of packed cold cut, spices and masala powder. The Applicant is apparently into trading of both taxable and exempted goods - the Applicant wants to know the percentage of input tax credit to be claimed in view of the nature of their business. Since the Applicant is involved in the supply of both taxable and exempted supplies, the Applicant has to avail the input tax credit proportionately in terms of section 16, 17 of CGST Act 2017 read with Rule 42 of CGST Rules 2017; wherein the procedure to be followed is clearly mentioned. What will be the GST consequences if we purchased goods from unregistered and composition dealers? - Scope of Advance Ruling - HELD THAT:- This question is not covered under the issues referred to in section 97(2) of CGST Act 2017, in respect of which an applicant can seek Advance Ruling and hence this Authority refrains from giving any ruling. Issues: 1. Percentage of GST input tax claim for services received 2. Percentage of GST input tax claim for general goods purchased 3. GST consequences of purchasing goods from unregistered and composition dealers Issue 1: Percentage of GST input tax claim for services received The applicant, a Partnership firm engaged in trading fresh and semi-processed meat products, sought an advance ruling on the percentage of GST input tax to be claimed for various services received. These services included GST paid for commercial rent, commission to ecommerce platforms like Dunzo and Swiggy, service charges by Paytm, and banks. The Authority highlighted that since the applicant deals with both taxable and exempted goods, input tax credit must be claimed proportionately in accordance with section 16, 17 of the CGST Act 2017 and Rule 42 of CGST Rules 2017.Issue 2: Percentage of GST input tax claim for general goods purchased The applicant also sought clarification on the percentage of GST input tax to be claimed for general goods purchased for their business, such as packing material, printed material, and capital goods like cutting machines and refrigerators. Similar to the first issue, the Authority reiterated that input tax credit must be availed proportionately based on the nature of the business, as per the provisions of section 16, 17 of the CGST Act 2017 and Rule 42 of CGST Rules 2017.Issue 3: GST consequences of purchasing goods from unregistered and composition dealers The applicant inquired about the GST implications of purchasing goods from unregistered and composition dealers. However, the Authority noted that this question falls outside the purview of issues eligible for advance ruling under section 97(2) of the CGST Act 2017. As a result, the Authority refrained from providing a ruling on this particular matter.In conclusion, the Authority ruled that input tax credit for the applicant's business must be availed in accordance with the relevant provisions of the CGST Act 2017 and CGST Rules 2017. The ruling emphasized the importance of proportionate claim based on the nature of the business dealing with both taxable and exempted goods. The Authority's decision provided clarity on the GST input tax claim for services received and general goods purchased while outlining the limitations of the advance ruling scope regarding purchases from unregistered and composition dealers.