INPUT OF PLANT AND MACHINERY

[FARIDUDDIN AHMAD]

Kindly clarify that the input on plant and machinery purchased for hauling paddy to rice can be utilized for payment of tax received from government department for hauling of paddy or not

[FARIDUDDIN AHMAD]

let me clarify that the paddy is being supplied to rice mill owner for hauling to get rice. owner of the rice prepare bill of hauling charges and charge GST on it

[FARIDUDDIN AHMAD]

kindly read "owner of the rice mill"

[Shilpi Jain]

Pls be clear on your query.

ITC eligibility is asked in whose hands? The Mill owner?

Mill owner provides services to whom - Government or a person who has received the supply order from Government?

ITC is simple, if it is used for making taxable supplies, ITC is eligible as the present ITC is not blocked u/s 17(5).

Pls ensure that the services are not exempt. Further clarity on facts can enable better comment

[Padmanathan KV]

The ITC is not blocked under section 17(5). But there maybe restrictions under 17(2) r.e.r 43.

consider following aspects as well:-

1. If exclusively engaged in paddy hulling taxable @ 5%, then full ITC is eligible.

2. if the said machinery is used for both paddy hulling as well as manufacture and supply of rice, then ITC has to be reversed to the extent of turnover of exempt supply as per Rule 43 ( NB:- supply of rice is taxable only if it is "pre-packed and pre-labeled", otherwise exempt)

[Amit Agrawal]

I agree with my professional colleagues. It is always advisable to raise your query with clear facts & also, giving reasons/s behind your doubt/s to get better answers.

[Ganeshan Kalyani]

Input tax credit is eligible for credit if the output is taxable under GST.

[KASTURI SETHI]

GST : Rice obtained as a product of milling process of paddy is not “agricultural produce” as defined in Para 2(d) of Notification No. 12/2017-C.T. (Rate) as milling process undertaken by millers change essential characteristics of produce from paddy to rice which are distinctly identifiable and separately marketable commodities.-----AAR--KARNATAKA Hindustan Agencies - 2021 (12) TMI 722 - AUTHORITY FOR ADVANCE RULING, KARNATAKA.

AI Summary

Input tax credit eligibility depends on use for taxable supplies; mixed use requires proportional reversal under apportionment rules. ITC on plant and machinery used for hauling paddy is available only to the extent the inputs are used for making taxable supplies. If the asset is exclusively used for taxable services, full ITC is admissible. If it is used for both taxable and exempt activities, ITC must be apportioned and reversed proportionately under the statutory reversal/apportionment rules. Determination of entitlement requires clarity on who claims ITC, the nature of the output supplies, and whether those supplies are taxable or exempt.