TaxTMI 
TaxTMI 
2021 (4) TMI 561
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....eas market and will be discharging applicable duty and tax including IGST; that the input tax credit has to be availed in terms of Section 16 of the CGST Act, 2017 and Rules made thereunder; that they will also avail input tax credit of GST paid on the goods procured domestically as well as from overseas market and the applicant will have to discharge GST on their outward supplies at applicable rate; that the said taxes will be discharged through Electronic Credit Ledger as well as through Electronic Cash Ledger in the case if balance available in Electronic Credit Ledger is not adequate. 2. The applicant has submitted that they also intend to procure Castor oil seeds directly from the Agriculturists who produce the same in their farms and after procuring the said Castor oil seeds they intend to supply in the Domestic market as well as intend to export the same; that as per their understanding, as of now "Agriculturists" are not required to obtain registration under Section 23 of the CGST Act, 2017; that 'Castor oil seeds' is also not covered in the Notification No.4/2017-Central Tax issued under Section 9(4) of the CGST Act, 2017 as amended from time to time as is evident from ....
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....arge GST in terms of Section 9(1) of the CGST Act, 2017 read with Notification No.01/2017-Central Tax(Rate), in terms of Schedule-I, Sr.No.70 of Notification No.01/2017-Integrated Tax(Rate) for Inter-state supply @5%; that the said notification does not stipulate that tax so payable is without input tax credit; that in other words when the applicant procures Castor oil seeds it does not attract GST; that however, it attracts GST when it is supplied by the applicant; that simultaneously, the applicant is having input tax credit earned on the inward supply viz. Gold meant for manufacture and its supply gold semi-finished silver etc. out of unwrought or in semi-manufactured forms or in powder form and base metal and the same are lying as Balance in Electronic Credit Ledger of the applicant; that in this back drop, the applicant wants to know whether GST on Castor oil seed can be discharged through the input tax credit balance available in the Electronic Credit Ledger of the applicant and has asked the following question seeking Advance Ruling on the same: "Can the applicant use Input Tax Credit Balance available in the Electronic Credit Ledger legimately earned on the inputs/....
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.... thereafter the same will be sold in to domestic market to various buyers on payment of GST at applicable rates (3% at present). Further we may also domestically trade in bullion to take the advantage of price fluctuations. (ii) We intend to procure Castor oil seeds (HSN l207) from agriculturist (not liable to be registered u/s 23 of CGST/SGST Act, 2Ol7), and will be selling in the Domestic Market to the buyer [Trading Activities]. No ITC will be available on procurement of Castor oil seeds as the same will be procured from the agriculturist. Whereas the sale will attract GST @ 5% on sale. 2. Reasons for accumulation of ITC. 1. The physical bullion is hedged on MCX and is highly volatile in nature. There can be sudden upward or downward movement in prices which may exceed the percentage of value additions on physical trades, thereby leading to accumulation of ITC on physical trades. For eg; We buy gold from market at Rs. 50000 on 01-01-21 and hedge the same on MCX by selling the future contract worth the same amount at Rs. 50500 On the same date. Now we may sell the gold on 01-02-21 at Rs. 48000 simultaneously we will buy the future contract on MCX at Rs.....
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.... supply in the Domestic market as well as intend to export the same and the GST on these castor oil seeds is 5% in terms of Schedule-I, Sr.No.70 of Notification No.01/2017-Central Tax(Rate). (iii) No input tax credit is available on procurement of castor oil seeds since the provisions of Section 9(4) of the CGST Act, 2017 and Section 5(4) of the IGST Act, 2017 are not operative and therefore not attracting GST on the supply of goods received by the Registered person from the unregistered person(in this case, the Agriculturist), and therefore they are not availing any input tax credit on procurement of such Castor oil seeds from Agriculturists. (iv) The applicant intends to trade in castor oil seeds (HSN Code 1207) and since they are not falling under the exempted category and hence are liable to discharge GST in terms of Section 9(1) of the CGST Act, 2017 read with Notification No.01/2017-Central Tax(Rate). (v) The said notification does not stipulate that tax so payable is without input tax credit and when the applicant procures Castor oil seeds, it does not attract GST but attracts GST when it is supplied by the applicant. (vi) The applicant is....
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....he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed; (b) he has received the goods or services or both. [Explanation.- For the purposes of this clause, it shall be deemed that the registered person has received the goods or, as the case may be, services-- (i) where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise; (ii) where the services are provided by the supplier to any person on the direction of and on account of such registered person;]35 (c) subject to the provisions of section 41, the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilisation of input tax credit admissible in respect of the said supply; and (d) he has furnished the return under section 39: Provided that where the goods against an invoice are received in lots or ....
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.... (a) motor vehicles for transportation of persons having approved seating capacity of not more than thirteen persons (including the driver), except when they are used for making the following taxable supplies, namely:- (A) further supply of such motor vehicles; or (B) transportation of passengers; or (C) imparting training on driving such motor vehicles; (aa) vessels and aircraft except when they are used-- (i) for making the following taxable supplies, namely:- (A) further supply of such vessels or aircraft; or (B) transportation of passengers; or (C) imparting training on navigating such vessels; or (D) imparting training on flying such aircraft; (ii) for transportation of goods (ab) services of general insurance, servicing, repair and maintenance in so far as they relate to motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa): Provided that the input tax credit in respect of such services shall be available- (i) where the motor vehicles, vessels or aircraft referred to in clause (a) or clause (aa) are used for the purposes specified ....
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....royed, 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. (6) The Government may prescribe the manner in which the credit referred to in sub-sections (1) and (2) may be attributed. Explanation.--For the purposes of this Chapter and Chapter VI, the expression "plant and machinery" means apparatus, equipment, and machinery fixed to earth by foundation or structural support that are used for making outward supply of goods or services or both and includes such foundation and structural supports but excludes- (i) land, building or any other civil structures; (ii) telecommunication towers; and (iii) pipelines laid outside the factory premises. 11. On going through the provisions of Section 17(5) as mentioned herein above, we find that the inputs i.e. gold dores and silver dores on which the applicant intends to avail input credit are not covered under the excluded provisions of the said section. Further, on going through the provisions of the Section-16 as mentioned above, we find that sub-section(1) specifically mentions that the registered....
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....of Castor oil seeds. In this regard, we find that firstly, the applicant has not submitted any document/literature etc. in respect of how they wish or intend to carry out the business of supply of castor oil seeds. Secondly, they have not provided/submitted any proof in respect of the input-final product nexus/connection in respect of the inputs i.e. gold and silver dores etc. vis-a-vis Castor oil seeds nor provided any such document/literature in respect of how the inputs i.e. gold dores or silver dores are used or intended to be used in the course or furtherance of their business of supply of Castor oil seeds. Even otherwise, on a plain comparison of the provisions of Section 16(1) of the CGST Act, 2017 with the issue in hand, it can very easily be derived that there is no nexus/connection whatsoever, of the inputs i.e. gold dores or silver dores with the business of supply of Castor oil seeds by the applicant. It can therefore, be seen that the even the basic conditions envisaged in the provisions of Section 16(1) have not been fulfilled in the instant case and we can therefore, undoubtedly conclude that the aforementioned inputs are not used or intended to be used in the course....