AAR rejects application for advance ruling on transfer of unutilized input tax credit between distinct persons under Section 97(2)(d)

AAR Chhattisgarh held that an application seeking advance ruling on transfer of unutilized input tax credit balance in E-credit ledger between distinct persons with same PAN but different GSTINs within same state falls outside the scope of advance ruling provisions. The authority determined that Section 97(2)(d) covers admissibility of input tax credit of tax paid, not transfer of unutilized credit balances in E-credit ledger. Since the applicant's query did not involve supply of goods/services or specified issues under Section 97(2), the application was rejected as not maintainable under advance ruling provisions.

---

---

Issues Involved:
1. Transfer of unutilized balance in E-credit ledger on merger of distinct persons within the same State having the same PAN.
2. Transfer of unutilized balance in E-credit ledger between distinct persons within the same State having the same PAN without following the process of merger.

Summary:

Issue 1: Transfer of Unutilized Balance on Merger
The applicant, M/s SBT Textiles Private Limited, sought an advance ruling on whether the unutilized balance of the E-credit ledger could be transferred on the merger of two distinct GSTINs of the same PAN within the State as per Section 18(3) of the CGST Act, 2017. The applicant argued that Section 18(3) allows the transfer of ITC in the event of a merger, and Rule 41 prescribes the manner of such transfer. They contended that since both units are distinct persons under Section 25(4) of the CGST Act, the unutilized balance of ITC should be transferable upon merger.

Issue 2: Transfer of Unutilized Balance Without Merger
The applicant also sought a ruling on whether the unutilized balance of the E-credit ledger could be transferred between distinct persons (i.e., from one GSTIN to another within the same State and PAN) without undergoing a merger. They argued that Rule 87(14) allows the transfer of the unutilized balance in the E-cash ledger between distinct persons, and similar provisions should apply to the E-credit ledger.

Authority's Analysis and Decision:
The Authority for Advance Ruling examined the admissibility of the issues under Section 97(2) of the CGST Act, 2017, which outlines the specific issues on which advance rulings can be sought. It clarified that the questions raised by the applicant did not fall under the specified categories, particularly the admissibility of input tax credit of tax paid or deemed to have been paid. The Authority concluded that the issues raised pertained to the transfer of unutilized balance in the E-credit ledger, which is outside the scope of advance ruling as defined under Section 97(2).

Order:
The application filed by M/s SBT Textiles Pvt. Ltd. for an advance ruling on the transfer of the unutilized balance of Input Tax Credit lying in the E-credit ledger was rejected. The Authority ruled that the issues raised were not maintainable under the scope of "advance ruling" as stipulated under Section 97(2) of the CGST Act, 2017.

---