AI Drafter 
TaxTMI 
TaxTMI 
TaxTMI 
2021 (1) TMI 331
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.... of dyes and dye intermediates. The Company has five manufacturing units situated at Kalamsar (TalukaKhambhat), Vatva, Odhav, Sanand and Bharuch. 2. A fire broke out in the night of 27th June, 2020 at around 8:40 PM in the warehouse of the Khambhat Unit of the applicant. Though the exact reason of the fire is not known and Forensic Science Laboratory (FSL) report is awaited, it is estimated that raw material, intermediate/ finished goods of approx. Rs. 40 Crores were destroyed. 3. It is pertinent to note that the Company manufactures Vinyl Sulphone, H Acid, M.P.D.S.A, C.P.C. Acetanilide Flakes, P.C.V.S. (herein after collectively referred to as "dye intermediates") which itself is a finished and marketable product. However, as the Com....
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....ns (3) and (4) of section 9; (c) the tax payable under the provisions of sub-sections (3) and (4) of section 5 of the Integrated Goods and Services Tax Act; (d) the tax payable under the provisions of sub-sections (3) and (4) of section 9 of the respective State Goods and Services Tax Act; or (e) the tax payable under the provisions of sub-sections (3) and (4) of section 7 of the Union Territory Goods and Services Tax Act, but does not include the tax paid under the composition levy; Section 2(63) - "input tax credit" means the credit of input tax. 6. Section 16 of the SGST Act, provides for eligibility and conditions for taking input tax credit. As per the said section- 16. (1) "every registe....
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......................................................... ...................................................................................................... (h) goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples; and ..................................................................................................... (i) Any tax paid in accordance with the provisions of sections 74, 129 and 130" 9. Thus, input tax credit shall not be available in respect of goods destroyed. The words "in respect of" restrict the scope of this section and, thus, it is pertinent to understand the meaning of words "in respect of". 9.1 This expression was examined by the Honorable S....
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.... said section nowhere states that input tax credit in respect of inputs utilized for manufacture of finished / intermediate goods shall be reversed, if such goods get destroyed. Once the input tax credit has been availed legitimately, the applicant cannot be asked to reverse such input tax credit without any specific provision in this regard. 12. If the intention of the legislature was to reverse input tax credit on inputs contained in finished/intermediate goods, the statute would have specifically provided for such reversal. There is no provision in the SGST Act which requires reversal of credit of input tax of inputs which have been already consumed in manufacture of finished / intermediate goods which subsequently got lost, damaged o....
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....dye intermediates manufactured by the Company are marketable and are also sold by the Company. Thus, dye intermediates manufactured by the Company are either used as intermediate products for manufacturing of dyes or are sold in the market as finished goods. 16. Considering the above, the Company is not liable to reverse input tax credit on inputs consumed in dye intermediates that was lying in stock and got destroyed on the date of fire. 17. At the time of personal hearing held through Video Conferencing on 24.09.2020, the Authorised Representative of the applicant, CA Dhaval Shah reiterated the facts as stated in the application and as mentioned herein above. DISCUSSION & FINDINGS: 18. We have carefully gone through the facts ....
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....tion of inputs, capital goods and input services is very wide and covers almost all the imaginable goods and services that are directly or indirectly used in course or furtherance of business. However, Section 17(5) of the CGST/SGST Act, 2017 prescribes a list of goods or services on which ITC is not admissible. The opening para of Section 17(5) of CGST Act, 2017 reads as follows:- "(5) Notwithstanding anything contained in sub-section (1) of section 16 and sub-section (1) of section 18, input tax credit shall not be available in respect of the following, namely:- ...... ...... (h) goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples; " The bare analysis of above section make....