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

GST Authority ruled on input tax credit for a meat trading partnership firm. The ruling mandated proportionate input tax credit claims for services and goods under CGST Act 2017, considering the firm's mixed business of taxable and exempted goods. The Authority clarified credit calculation methodology while declining to address GST implications of purchases from unregistered dealers.

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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.

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