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2023 (10) TMI 216 - AAAR - GSTTime limit for filing appeal - Input Tax Credit - inputs and input services procured by the appellant, in order to undertake the mandatory CSR activities as required under the Companies Act, 2013 - Books and stationery - All kinds of civil works, whether or not including plant and machinery items - All plant and machinery items - All plant and machinery items - furniture - HELD THAT - The present appeal filed on 22.10.2021, has been filed after the prescribed time limit of 30 days from the date of communication of Ruling, which expired on 23/09/2021, as prescribed under section 100(2) of the CGST Act, 2017. There has been a delay of 30 days. In the application for condonation of delay filed by the appellant alongwith the appeal, the appellant submitted that the delay has occurred on account of ill health of their staff looking after litigation work because of Covid-19 and thereafter the resources were fully engaged in GST year end activity, further due to Covid-19 pandemic, the company was operating on a limited staff - there are sufficient cause to condone the delay of 30 days in filing the appeal after expiry of appeal period on 23.09.2021. Even otherwise, as per Order dated 10.01.2022 of Hon ble Supreme Court in Mise. Application No. 21 of 2022 in Misc. Application No. 665 of 2021 in Suo Moto Writ Petition (C) No.3 of 2020 2022 (1) TMI 385 - SC ORDER , the period from 15.03.2020 till 28.02.2022 shall stand excluded in computing the period of limitation and all persons shall have a limitation period of 90 days from 01.03.2022. In view of the foregoing, the delay is condoned in filing the appeal in terms of section 100 of the CGST Act, 2017 and proceed to decide the appeal on merits. The legislature has clarified its intent to disallow input tax credit on goods or services or both which are to be used for activities relating to obligations under corporate social responsibility. Appeal dismissed.
Issues Involved:
1. Eligibility of Input Tax Credit (ITC) on inputs and input services procured for Corporate Social Responsibility (CSR) activities. 2. Interpretation of "in the course and furtherance of business" under Section 16 of the CGST Act, 2017. 3. Application of Section 17(5) of the CGST Act, 2017 regarding blocked credits. 4. Condonation of delay in filing the appeal. Summary: 1. Eligibility of ITC on CSR Activities: The appellant, M/s Adama India Private Limited, sought advance ruling on whether inputs and input services procured for mandatory CSR activities qualify as being in the course and furtherance of business, and thus eligible for ITC under Section 16 of the CGST Act, 2017. The Gujarat Authority for Advance Ruling (GAAR) denied the eligibility of ITC, stating that CSR activities are excluded from the normal course of business as per the Companies (CSR Policy) Rules, 2014, and thus not eligible for ITC under Section 16(1) of the CGST Act. 2. Interpretation of "in the course and furtherance of business": The appellant argued that GAAR erroneously equated the expressions "normal course of business" and "course and furtherance of business." They contended that CSR activities, although not part of the normal business operations, are in furtherance of business as they contribute to goodwill and are mandated by law. The appellant cited various judgments to support their claim that CSR expenses are connected with the business and should be eligible for ITC. 3. Application of Section 17(5) of the CGST Act: The appellate authority noted that ITC on inward supplies is available only if outward supplies are taxable. Since CSR activities are provided free of cost and not with the motive to earn profit, they cannot be treated as in the course or furtherance of business. It was also noted that expenses on CSR activities are not considered business expenditure under Section 37 of the Income Tax Act, 1961, and thus ITC cannot be claimed on such expenditure. The authority referred to the 48th GST Council Meeting, which recommended that ITC on CSR expenditure should not be allowed and should be included in the list of blocked credits under Section 17(5) of the CGST Act. 4. Condonation of Delay: The appeal was filed after the prescribed time limit of 30 days. The appellant requested condonation of the delay due to the ill health of their staff and operational constraints during the Covid-19 pandemic. The appellate authority found sufficient cause to condone the delay and proceeded to decide the appeal on merits. Conclusion: The appellate authority upheld the ruling of GAAR, rejecting the appeal filed by M/s Adama India Private Limited. It was concluded that ITC on inputs and input services used for CSR activities is not allowable under the CGST Act, 2017.
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