Reversal of ITC on capital goods from over all sales 80% supply is exempted

[PN ELAMPARRUTHY]

During audit asking to reversal the Common credit . Basically firm is Rice Mill,Sale of rice in Above 25 KG. any case related or any AAR

AI Summary

Input tax credit apportionment required where supplies are largely exempt, with proportionate reversal or export exception.
Where capital goods are used commonly for taxable and exempt supplies, ITC must be apportioned and the portion attributable to exempt supplies reversed in proportion to exempt turnover; credit attributable to zero rated supplies (such as exports) remains eligible and need not be reversed.