2021 (1) TMI 1193 - AAR - GST

Scope of Advance Ruling application - Admissibility of ITC - procurement of the concerned inputs if the procedure as elaborated, is adopted by the applicant in respect of inward supply of scrap and sponge iron used by the applicant for manufacture of M.S. billets - procedure adopted by the applicant and the documents/records maintained by the applicant is sufficient compliance of the conditions and restrictions for input tax credit as given under the GST Acts - HELD THAT - The applicant's question whether the procedure adopted and the documents/records maintained by applicant can be deemed to be a sufficient compliance of conditions and restrictions for admissibility of input tax credit of tax paid on inward supply of local scrap and sponge iron used in the manufacture of M.S. billets. This authority is of view that the issue is technical/procedural in nature and is not covered by any of the clauses of Sec. 97(2).

Summary

Issues Involved:
1. Admissibility of Input Tax Credit (ITC) on procurement of scrap and sponge iron for manufacturing M.S. billets.
2. Compliance with conditions and restrictions for ITC under the GST Act.
3. Sufficiency of documents and records maintained by the applicant for ITC eligibility.

Issue-wise Detailed Analysis:

1. Admissibility of Input Tax Credit (ITC) on Procurement of Scrap and Sponge Iron:
The applicant, engaged in manufacturing M.S. billets, sought an advance ruling on the availability of ITC on scrap and sponge iron used as inputs. The applicant argued that the concerned inputs are directly used for business purposes and are not blocked credits under Section 17 of the GST Act. Therefore, the ITC should be admissible if procedural conditions are met.

2. Compliance with Conditions and Restrictions for ITC under the GST Act:
The applicant listed procedural conditions for ITC admissibility:
- Possession of tax-paying documents.
- Actual receipt of goods.
- Payment of tax charged on supply to the government.
- Filing of returns under Section 39.

The applicant maintained that they comply with these conditions through proper documentation, ERP system entries, and verification processes. They also highlighted measures to ensure vendors file their GSTR-1 and GSTR-3B returns, and that taxes are paid to the government.

3. Sufficiency of Documents and Records Maintained by the Applicant for ITC Eligibility:
The applicant detailed their documentation process, including:
- Tax invoices as per Section 31.
- Contracts and purchase orders matching invoice details.
- ERP system entries for receipt and stock updates.
- Gate entry slips, weighment slips, Goods Receipt Notes (GRN), and quality inspection reports.
- Cross-verification with the GSTR-2A statement on the GST portal.

The applicant argued that these records ensure compliance with GST provisions and should suffice for ITC eligibility.

Authority's Findings and Ruling:

Discussion and Findings:
The authority reviewed the applicant's submissions and the relevant GST provisions. They noted that the question posed by the applicant pertains to procedural compliance and documentation sufficiency, which are technical in nature.

Ruling:
The authority concluded that the applicant's question is technical/procedural and not covered by any clauses of Section 97(2) of the CGST Act. Therefore, the application was rejected as "inadmissible" under the first proviso to Section 98(2) of the CGST Act.

Validity:
The ruling is valid subject to provisions under Section 103(2) until declared void under Section 104(1) of the GST Act.