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Issues: (i) Whether the appellant bore the burden to prove eligibility for input tax credit and the applicability of any exception to blocked credit; (ii) Whether a non-specific invocation of Section 17(5) could sustain disallowance of input tax credit; (iii) Whether the disputed classes of inward supplies qualified for input tax credit; (iv) Whether lawfully leviable cess formed part of the taxable value of supply; (v) Whether interest on inadmissible input tax credit was payable only where the credit was availed and utilised; and (vi) Whether penalty under Section 73 was payable.
Issue (i): Whether the appellant bore the burden to prove eligibility for input tax credit and the applicability of any exception to blocked credit.
Analysis: Section 16(1) permits credit for supplies used in the course or furtherance of business, subject to statutory restrictions. Section 155 places the burden of proving eligibility on the claimant. Where a supply prima facie falls within a blocked-credit category, contemporaneous evidence must establish the factual conditions of the claimed statutory exception; invoices, payment entries, or unsupported assertions do not suffice.
Conclusion: Against the assessee: the burden to establish eligibility and any claimed exception to blocked credit lay on the appellant.
Issue (ii): Whether a non-specific invocation of Section 17(5) could sustain disallowance of input tax credit.
Analysis: The exclusions under Section 17(5) apply to distinct categories and involve different statutory tests. The provision cannot operate as a general residuary ground for disallowing an expenditure perceived as unnecessary for business; the applicable clause must be identified for the relevant inward supply.
Conclusion: In favour of the assessee: a bare and unspecified invocation of Section 17(5) cannot, by itself, sustain disallowance.
Issue (iii): Whether the disputed classes of inward supplies qualified for input tax credit.
Analysis: The appellant failed to produce vehicle-wise records, consumption registers, service documents, asset records, capitalisation material, business-travel evidence, or other contemporaneous records establishing an invoice-to-asset nexus and Business Nexus. The exception for transportation of goods in the pre-amendment motor-vehicle provision was not established. Renovation and construction claims lacked evidence to show non-capitalisation or that the relevant asset qualified as plant and machinery under the retrospectively amended provision. Gifts of sarees and clothes, food and catering expenditure, and personal travel or hotel expenditure were covered by express blocked-credit restrictions or lacked proof of business use.
Conclusion: Against the assessee: the disputed input tax credit was inadmissible and its disallowance was sustained.
Issue (iv): Whether lawfully leviable cess formed part of the taxable value of supply.
Analysis: Section 15(2)(a) requires the Transaction Value to include taxes, duties, cesses, fees, and charges levied under another law where charged separately by the supplier. GST is levied on the underlying taxable supply after statutory determination of its value; inclusion of a lawfully leviable cess does not constitute an impermissible tax on cess.
Conclusion: Against the assessee: a cess that is lawfully leviable and satisfies Section 15(2)(a) forms part of the taxable value.
Issue (v): Whether interest on inadmissible input tax credit was payable only where the credit was availed and utilised.
Analysis: Section 50(3), read with Rule 88B(3), confines interest to the period and extent of Wrongful Availment and Utilisation of inadmissible credit. Mere wrongful availment without utilisation does not attract such interest.
Conclusion: In favour of the assessee: interest is payable only to the extent and for the period of wrongful availment and utilisation, to be determined under the applicable statutory mechanism.
Issue (vi): Whether penalty under Section 73 was payable.
Analysis: Penalty is not automatic merely because a tax demand arises, and the statutory distinctions concerning bona fide, technical, and fraudulent contraventions remain material. On the sustained findings that the appellant did not establish entitlement to the disputed credit, the statutory penalty applicable to the violation under Section 73 follows the tax legally sustained and requires recomputation where necessary.
Conclusion: Against the assessee: penalty under Section 73 applies on the tax amount legally sustained, subject to recomputation.
Final Conclusion: The tax liability founded on the disallowed input tax credit and the cess valuation treatment remains enforceable, with interest confined to utilised inadmissible credit and penalty aligned to the tax legally sustained.
Ratio Decidendi: A claimant of input tax credit must establish through contemporaneous evidence the factual basis of eligibility or of a statutory exception to blocked credit; unsubstantiated assertions of business use do not discharge that burden.
Input tax credit evidence requirements defeat unsupported blocked-credit exceptions, while interest arises only on utilised inadmissible credit.
Input tax credit eligibility, including any exception to blocked credit, requires contemporaneous evidence proving the factual basis and business nexus; invoices, payments, and assertions alone are insufficient. Section 17(5) requires identification of the applicable blocked-credit clause and cannot operate as a general ground to disallow expenditure. Vehicle, construction, renovation, gift, catering, and personal travel claims remain inadmissible where statutory restrictions apply or business use, non-capitalisation, asset nexus, or an exception is unproved. Lawfully leviable cess separately charged forms part of taxable value. Interest on inadmissible credit is confined to wrongful availment and utilisation. Penalty is not automatic, but applies under Section 73 to tax legally sustained, subject to recomputation.
Input tax credit - blocked-credit exclusions, specificity and burden of proof - Valuation of taxable supply - cess included in transaction value - Interest on wrongly availed and utilised input tax credit - Penalty for ineligible input tax credit Input tax credit - blocked-credit exclusions and burden of proof - Specificity of blocked-credit disallowance - Eligibility of input tax credit on brick-kiln-related vehicles, tyres and tubes, building materials, clothing gifts, food and catering, travel, and camera and electronic expenditure under the blocked-credit provisions - HELD THAT: - Input tax credit available for supplies used in the course or furtherance of business remains subject to the specific exclusions in Section 17(5). That provision cannot be used as a generic residuary ground for disallowance; the applicable statutory exclusion must be identified according to the nature of each supply. However, the claimant bears the burden of proving eligibility and the factual conditions of any claimed exception through contemporaneous documentary material. The Appellant did not establish the requisite invoice-to-asset nexus, transportation use, non-capitalisation of renovation expenditure, qualification of the claimed assets as plant and machinery, or business nexus of the travel and electronic expenditure. Clothing distributed as gifts and food and catering expenditure were expressly blocked. The retrospective substitution of "plant and machinery" also required the claimed asset to satisfy the statutory definition, and not merely a broad functionality test. [Paras 11, 12, 14, 18] The disallowance of the disputed input tax credit was affirmed. Valuation of taxable supply - cess included in transaction value - Inclusion of a lawfully leviable cess recovered in connection with a taxable supply in the value of supply for GST - HELD THAT: - Section 15(2)(a) requires taxes, duties, cesses, fees and charges levied under another law to be included in the value of supply where separately charged by the supplier. GST is thereby levied on the underlying taxable supply after its value is determined in accordance with the statute, and not as a tax upon cess. The valuation provision cannot validate a cess that is not lawfully leviable; but, once the cess is lawfully leviable and the statutory requirements are met, its inclusion in the taxable value follows. [Paras 15] The findings on the cess issue were upheld. Interest on wrongly availed and utilised input tax credit - Interest on input tax credit ultimately found inadmissible - HELD THAT: - Interest does not arise merely upon wrongful availment of input tax credit. Under Section 50(3), read with Rule 88B(3), it is chargeable only to the extent that the inadmissible credit was wrongly availed and utilised, for the period from utilisation until reversal or payment. The contention that interest could arise only from adjudication was not accepted. [Paras 16, 18] Interest was directed to be determined strictly according to the wrongful utilisation of the inadmissible credit. Penalty for ineligible input tax credit - Applicability of penalty under Section 73 upon disallowance of the claimed input tax credit - HELD THAT: - Penalty requiring fraud, wilful misstatement, suppression or intent to evade cannot be presumed from a disallowance alone, whereas a statutory civil penalty follows upon proof of its prescribed objective conditions. Since the Appellant failed to establish entitlement to the disputed credit, the prescribed penalty under Section 73 was held applicable. [Paras 17, 18] The penalty was sustained to the extent of the tax legally upheld and was directed to be recomputed where necessary. Final Conclusion: The appeal was dismissed insofar as it challenged the disallowance of input tax credit, while the findings on cess were upheld. Interest was restricted to wrongly availed and utilised credit, and the penalty was directed to be recomputed in accordance with the tax legally sustained.