UTILIZATION OF INPUT TAX CREDIT

[VIGNESH]

sir kindly clarify why ITC was not allowed in the case when no restriction is placed in the ACT for utilisation of ITC. CASE- M/s Aristo Bullion Pvt Ltd - 2021 (4) TMI 561 - AUTHORITY FOR ADVANCE RULING, GUJARAT issue raised- Can the applicant use Input Tax Credit Balance available in the Electronic Credit Ledger legimately earned on the inputs/raw-materials/inward supplies (meant for outward supply of Bullions) towards the GST liability on ‘Castor Oil Seed’ which were procured from Agriculturists and subsequently meant for onward supply?

[Rajagopalan Ranganathan]

Sir,

Since you are paying gst under reverse charge mechanism under Section 9 93) of CGST Act, 2017 in respect of ‘Castor Oil Seed’ which were procured from Agriculturists, you are not eligible to pay gst utilizing the ITC earned by you in respect of inputs/raw-materials/inward supplies meant of bullion.

[Rajagopalan Ranganathan]

Sir,

I apologizes for understanding your question wrongly. For utilization fo ITC no one-to-one correlation is required, that is, to demonstrate the use of bullion in the business of supply of castor oil seeds and vice-versa. Therefore in my view the order of AAR is to be appealed to appellate authority. I am of the view that you can very well use the credit for payment of gst on supply of castor oil seeds.

[Ganeshan Kalyani]

I agree with the views of Sri Rajagopalan Sir.

AI Summary

Utilization of Input Tax Credit for reverse charge GST liability on agricultural procurements is contested; appeal recommended.
Dispute whether Input Tax Credit held in the Electronic Credit Ledger from bullion inputs may be used to pay GST liability arising under the Reverse Charge Mechanism on castor oil seeds procured from agriculturists. An administrative ruling denied such utilization, while commentators argue no statutory one to one correlation is required and that ledger credit should be applicable to the RCM liability, recommending appeal of the ruling.