TaxTMI 
TaxTMI 
2021 (7) TMI 1370
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....s the "appellant") against the order of Authority for Advance Ruling No. 01/2021 dated 18.01.2021. 3. BRIEF FACTS OF THE CASE i) The appellant M/s Jaideep Ispat And Alloys Pvt. Ltd, a company registered under the Companies Act (hereinafter referred to as 'the appellant') is registered under the Central Goods and Services Tax Act, 2017 and the Madhya Pradesh State Goods and Services Tax Act, 2017 (hereinafter referred to as the "GST Act") having the registration number23AABCJ4896R4ZQ. ii) The appellant manufactures M.S. billets in its factory located at Pithampur. For the purpose of manufacture, the appellant procures various scrap iron and sponge iron which is melted in their factory and converted to M.S. billets which are supplied by the appellant to various customers on payment of applicable GST thereon. iii) As a standard operating procedure for procurement of such scrap and sponge iron (hereinafter referred to as "the concerned inputs"), the appellant maintain various documents, the details of which are given herein below. That, the appellant maintains an ERP system whereby the same procedure is followed for all procurements of the concerned inputs and relat....
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....admissible", in terms of first provision to Section 98(2) of the CGST Act, 2017. 6. QUESTIONS RAISED BEFORE THE APPELLATE AUTHORITY FOR ADVANCE RULING (AAAR) The following question, which is the very same as posed before AAR, have been posed before the Appellate Authority: - Whether the procedure adopted and the documents/records maintained by the appellant (as elaborated below) can be deemed to be a sufficient compliance of the conditions and restrictions for the admissibility of input tax credit of the tax paid on inward supply of local scrap and sponge iron used by the appellant for manufacture of M.S. billets as per Section 16 of GST Act and Rule 36 of GST Rules? 7. GROUNDS OF APPEAL Aggrieved by the rejection of the application for advance ruling, the appellant has filed this appeal dated 19-02-2021 under Section 100 of the CGST Act, 2017 and MPGST Act, 2017, on the following grounds:- i) Appellant submits that, the Advance Ruling Authority erred in ruling that this issue is procedural in nature. ii) That, the Advance Ruling Authority failed to see that the question is not about the procedure to be followed, but rather about whether the procedu....
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..... c. The tax charged in respect of such supply should be paid. d. The appellant should have filed a return under Section 39. viii) The appellant submits that, if it can be established that sufficient compliance and documentary records are maintained, and all the procedural requirements are followed with as detailed below, then the input tax 'credit in respect of the concerned inputs should be deemed to be admissible. Thus the compliance can be deemed "sufficient" if the prescribed conditions are complied with. The appellant would like to make the following submissions in respect of the above. Possession of tax paying documents ix) As per Rule 36 of the GST Rules, input tax credit shall be availed by a registered person on the basis of any of the following documents - a. An invoice issued by the supplier in accordance with Section 31 b. An invoice issued under the provisions of Section 31(3)(f) c. A debit note issued by the supplier in accordance with Section ?4 d. A bill of entry or any similar document for integrated tax on imports e. Any Input Service Distributor invoice or any such docu....
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.... a further documentary evidence of actual receipt of the goods in the same vehicle as is mentioned on the documents. c. Immediately after the arrival of the vehicle in the premises, a weighment of the truck is conducted which shows the total gross weight and net weight, along with the date of weighment and the time of weighment. This slip serves as a corroborative document in addition to various other documents issued by the supplier showing the quantitative details of the concerned inputs. d. Further, after the weighment of the material upon arrival, a Goods Receipt Note (GRN) is also generated. This GRN is generated at the time of making an entry in the ERP accounting system of the appellant. Hence, the records of the goods showing the concerned inputs are also updated in the accounting system and the related quantitative details are automatically updated in the stock register of the appellant recording receipt of the goods. e. After this, a quality inspection report is generated wherein the quality of the material is verified, and it is ensured that the quality is in accordance with the agreed norms as agreed between the appellant and the vendor. When ....
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....sess his own taxes and pay them in a return filed under Section 39. The said return is form GSTR-3B. Hence, it can be said that payment of taxes shall be done by the vendor by way of filing GSTR-3B return. xx) Appellant submits, that, in accordance with Rule 36(4), a condition is prescribed for availing the input tax credit, i.e. the total input, tax credit to be availed by a registered person in respect of those supplies for which details have not been uploaded in a return filed under Section 37 by the supplier, shall not exceed 5 per cent of the eligible credit available in respect of those invoices/debit notes the details of which have been uploaded by the supplier in a return filed under Section 37 by the supplier. xxi) Appellant submits, that the availability of input tax credit is largely dependent on whether the supplier has uploaded the details of the supplies in a return filed under Section 37, i.e. GSTR-1 return of the supplier/vendor. Hence, the appellant submit that, it is important to ensure that the vendor has in fact uploaded the details of the supplies made to the appellant in their GSTR-1 return. xxii) The appellant claims that these cond....
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....Hon'ble High Court of Delhi had even said that input credit shall be admissible even if the supplier had not fulfilled his obligation under law. That, as per the decision of the Hon'ble High Court, the only obligation of the recipient is to produce an invoice which is generated by the supplier who is registered under the tax law and to check whether such supplier is properly registered under law. To expect the recipient to do anything more would be futile because it is not practically possible for any person engaged in business to carry out the responsibility of checking the compliance of each and every supplier. xxv) An extract from the above mentioned decision of Hon'ble High Court is reproduced below:- Extract from decision of the High Court in W.P. (C) 2106/2015 At the outset, it requires to be understood that Section 2 (1) (r) of the DVAT Act implicitly recognizes that when the buyer pays the seller the price for the purchase of goods, such price is inclusive of the DVAT for which the seller is -liable" to pay to the Government. Which is why it talks of payment by the buyer of the liability that is essentially that of the seller. VAT is a....
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....ng the law explained in the [above decisions], it can be concluded in the case that there is a singular failure by the legislature to make a distinction between purchasing dealers who have bona fide transacted with the selling dealer by taking all precautions as required by the DVAT Act and those that have not. Therefore, there was need to restrict the denial of ITC only to the selling dealers who had failed to deposit the tax collected by them and not punish bona fide purchasing dealers. The latter cannot be expected to do the impossible. It is trite that a law that is not capable of honest compliance will fail in achieving its objective. xxvi) Appellant further submit that the departmental appeal against the above order of the High Court in the Hon'ble Supreme Court was dismissed by the Hon'ble Apex Court of India. Therefore, even the Supreme Court upheld the principles laid in the above decision by the Hon'ble High Court of Delhi. Thus, it should be deemed that the recipient has fulfilled their obligation under law to check that the supplier was registered under law, and have made payment to such supplier on a bona-fide basis Therefore, input tax credit shou....
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....aim of input tax credit xxviii) Appellant further submit that another condition for availing the input tax credit under Section 16(2) is that return under Section 39 is filed by the recipient. Appellant submit that, the return under Section 39 is GSTR-3B return, and that the input tax credit is claimed by them in the said return itself. Therefore, this condition is definitely being fulfilled for admissibility of input tax credit. xxix) Further, as per the second proviso to Section 16(2) - Provided further that where a recipient fails to pay to the supplier of goods or services or both, other than the supplies on which tax is payable on reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereon, in such manner as may be prescribed: xxx) Appellant submits, that it can be inferred from above, that if payment of the consideration along with applicable tax thereon is not made to the suppl....
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.... xxxvi) Appellant submits that the question would be termed as procedural if it was asking for the right procedure to be adopted in any given situation. That, such a question is not posed before the authority, only their opinion about the fulfillment of mentioned conditions was asked. 8. PERSONAL HEARING The appellant was given an opportunity of personal hearing on 20.07.2021 through virtual mode. The appellant was heard through Shri Pradeep Asawa, Chartered Accountant. After hearing the appellant has expressed his satisfaction through a letter and asked for decision. 9. DISCUSSION AND FINDINGS We have carefully gone through the submissions made by the appellant in his application as well as the submission made at the time of personal hearing and the submission made by circle in charge of Circle-3, Commercial Tax Department (SGST), Indore. 10. We find that the appellant has contended that the Advance Ruling Authority erred in ruling that this issue is procedural in nature. The appellant further contended that the question raised before the Advance Ruling Authority is not procedural in nature and is specifically asking whether the conditions for availment and ad....
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....application was made by GSTIN-23AABCJ4896R4ZQ having legal name- Jaideep Ispat And Alloys Pvt. Ltd and the same company is having another unit namely M/s. Jaideep Ispat And Alloys Pvt. Ltd., Unit-II having another GSTIN Number-23AABCJ4896R2ZS. It was also informed that an adjudication has been made in respect of M/S Jaideep Ispat And Alloys Pvt. Ltd., Unit-II GSTIN Number- 23AABCJ4896R2ZS and demand has also been raised against the appellant. That many points raised by the appellant in the application before the Advance Ruling Authority were considered during the adjudication proceedings. Now it is imperative to ascertain who can be the applicant. As per Section 95(c), "applicant" means any person registered or desirous of obtaining registration under this Act. As per clause 84 of section 2 of CGST Act a "person" includes- (a) an individual; (b) a Hindu Undivided Family; (c) a company; (d) a firm; (e) a Limited Liability Partnership; (f) an association of person or a body of individuals whether incorporated or not, in India or outside India; (g) any corporation established by or under any Central Act, State Act....