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The AAAR held that a registered person must reverse Input Tax Credit (ITC) availed on inputs used to manufacture steel nails that were subsequently destroyed in a fire accident. While Section 16 of SGST Act, 2017 generally allows ITC on inputs used in furtherance of business, Section 17(5) specifically prohibits ITC on goods that are "lost, stolen, destroyed or written off." The AAAR emphasized that Section 17(5) contains a non-obstante clause giving it overriding effect over Section 16(1) and Section 18(1). Therefore, despite the appellant's arguments regarding Section 16(1), the AAAR upheld the original Advance Ruling, requiring the appellant to reverse ITC on inputs used in manufacturing the destroyed finished goods.
The AAAR held that a registered person must reverse Input Tax Credit (ITC) availed on inputs used to manufacture steel nails that were subsequently destroyed in a fire accident. While Section 16 of SGST Act, 2017 generally allows ITC on inputs used in furtherance of business, Section 17(5) specifically prohibits ITC on goods that are "lost, stolen, destroyed or written off." The AAAR emphasized that Section 17(5) contains a non-obstante clause giving it overriding effect over Section 16(1) and Section 18(1). Therefore, despite the appellant's arguments regarding Section 16(1), the AAAR upheld the original Advance Ruling, requiring the appellant to reverse ITC on inputs used in manufacturing the destroyed finished goods.
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