9911796707
TMI Blog2022 (3) TMI 573X X X X Extracts X X X X X X X X Extracts X X X X ..... , the applicant also manufactures ink, which is used in printing of rupee notes, consumes captively, transfers to their branch located at Salboni, West Bengal and also supplies to M/s. Security Printing and Minting Corporation of India Ltd (hereinafter referred to as SPMCIL'). Thus the applicant is involved in taxable as well as exempted supplies. Whether ITC can be claimed on common services which are utilized for both taxable as well as exempted supplies? - HELD THAT:- This question is not covered under the issued referred to in Section 97 (2), in respect which an applicant can seek advance ruling, as the ITC of the tax paid on common services, utilized for both taxable as well as exempted supplies is governed under Section 17 (2) of the CGST Act 2017 read with Rule 42 of the CGST Rules 2017 - any registered person, to avail the input tax credit, has to check the entitlement in terms of Section 16 (1) and also whether the said credit falls under the blocked credits in terms of Section 17(5) or not. If they are still entitled to avail the said credit, then they should apportion the said credit in terms of Section 17(1) Section 17 (2), if the relevant supplies are utili ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... applicant ), Note Mudran Nagar, BRBNMPL Township, KRS Road, Metagalli, Mysuru-570003, having GSTIN 29AAACB8111E1Z1, have filed an application for Advance Ruling under Section 97 of CGST Act, 2017 read with Rule 104 of CGST Rules, 2017 and Section 97 of KGST Act, 2017 read with Rule 104 of KGST Rules, 2017, in form GST ARA-01 discharging the fee of ₹ 5,000/- each under the CGST Act and the KGST Act. 2. The Applicant is a Private Limited Company registered under the provisions of Central Goods and Services Tax Act, 2017 as well as Karnataka Goods and Services Tax Act, 2017 (hereinafter referred to as the CGST Act and KGST/SGST Act respectively). The applicant produce bank notes conforming to International Standards set by Central Banking Monetary Authorities of the world and makes them available in adequate quantities to the Reserve Bank of India at competitive prices. 3. The applicant has sought advance ruling in respect of the following questions: a. Whether ITC can be claimed by the applicant on common services such as CISF Township Security Services, Maintenance of Water Treatment Plant, Horticulture, Maintenance of Residential Quarters, Maintenance of Inform ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aving GSTIN 19AAACB8111E1Z2 (hereinafter referred as Salboni unit ). The present capacity for both the presses is about 16 billion note pieces per year on a two shift basis. Both the presses have installed the latest state of the art technology in bank note printing. The machinery at Mysuru unit has been supplied by M/s. KBANotasys SA, Switzerland and that of Salboni by M/s. Komori Corporation, Japan. Both the presses are equipped with sophisticated Security Surveillance Systems. 5.3 The practice of Reserve Bank of India (RBI) is to issue indent for printing rupee notes at the beginning of financial year, and both Mysuru Unit and Salboni Unit will make their procurement of raw materials based on printing requirement which is allotted by corporate office for the period. The applicant states that they are engaged in outward supply of sale of rupee notes which are printed in the Mysuru Unit and sent to RBI on agreed rate of cost-plus margin basis where the said supply of Rupee Notes to RBI is wholly exempted from levy of GST vide S.No. 117 of Notification No. 2/2017 of Central Tax (Rate) and S.No. 117 of Notification No. 2/2017 of Integrated Tax (Rate). 5.4 The applicant stat ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... IMU) following are the raw material which are used for manufacturing ink such as varnish, solvent, pigment, additives, dryers and other chemicals including packing materials, spares, consumables, services in connection with repairs and maintenance of plant used for manufacturing ink. The Applicant has also entered into an agreement with a UK based company, for transfer of technical know-how in connection with manufacturing of Ink. As per the said agreement, the applicant pays a minimum royalty fee plus additional or variable royalty at a specified percentage on the total quantity of ink produced multiplied by the cost of production of ink. Accordingly, the company has paid IGST on the said Import of Services under reverse charge mechanism (RCM) as a recipient of service and claims Input Tax Credit. As per the books of accounts of printing press following are the inward supplies used for manufacturing of rupee note such as paper, spares, consumables, packing materials, services in connection with repairs and maintenance of printing plant and many other expenses incurred in printing press. As the inward supplies are used exclusively for manufacturing of rupee note which is an ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... plicant is maintaining the entire area of land including landscaping, gardening etc. through outsourced manpower. (v) Maintenance of Residential Quarters: The applicant has provided accommodation to its employees within the township in the residential quarters. The day to day repair and maintenance like civil, electrical work of the township are managed through an outsourced agency by way of an annual maintenance contract. (vi) Maintenance of Information System: Maintenance of information system and networking of the applicant company is carried out through an outsourced agency by way of an annual maintenance contract. (vii) Maintenance of Sewage Treatment Plant: Waste water generated in the printing press, Varnika (IMU), residential area and BNPMIPL paper mill are treated in sewage treatment plant and used for gardening purpose, the Operations and Management of STP including necessary manpower is outsourced by the applicant. The applicant states that they have proportionately claimed input tax credit on the above-mentioned inward supply of goods or services or both which are used in connection with manufacturing of ink and rupee note as the said com ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ffected during the year by the applicant, the summation of such supply amounts to ₹ 1610,45,35,416/-. As the applicant maintains separate books of account for Varnika (IMU) and for Printing Press which manufacture rupee note, the ITC claimed by them were also determined separately as per Rule 42 of the CGST Rules, 2017. As per the books of accounts of Varnika (IMU), the applicant has claimed ITC on the following inputs which are used for manufacturing ink such as varnish, solvent, pigment, additives, dryers and other chemicals including packing materials, spares, consumables which are procured from both indigenous and import market and input services which are used in connection with repairs and maintenance of ink manufacturing plant, including inward supply of services on which tax is payable under RCM. ITC Calculation for Varnika (IMU) for the F.Y 2019-20 Particulars of Input Tax Credit Total ITC Available ITC 100% eligible Common Credit (C=A-B) Proportionately Ineligible ITC as per Rule 42 (D) Eligible ITC for F.Y. 19-20 (E=B ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... er used for manufacture of bank note being exempted supply. The same is determined as [C = (A - B)]. As per Rule 42 this will be denoted as C2 . (D) - ITC which need to be reversed by the applicant is determined based on Rule 42 of CGST Rules, 2017 which is Value of Exempted Supply divided by Value of Total Turnover in the State multiplied by Common Credit determined as per (C). As per Rule 42 the Value of Exempted Supply will be denoted as E , Value of Total Turnover will be denoted as F , and the ITC to be reversed will be determined as D1. Which is determine as follows D1 = (E / F * C2) (E) - Input Tax Credit which is eligible and claimable by the applicant, will be ITC on goods or services which are exclusively used for taxable supply which is denoted as (B) and Proportionate ITC on common credit which are used for taxable supply, which is determined as a balancing figure after reversal of ITC as per Rule 42 of the CGST Rules, 2017. Note: - As a policy the applicant is not availing credit which are used exclusively for exempted supply which will be denoted as_JT21 and similarly the applicant is not availing any credit which is blocked for availment a ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... - 1,06,85,035 88,83,642 18,01,393 RCM IGST 3,10,80,512 - 3,10,80,512 2,58,40,639 52,39,873 Subtotal (B) 6,19,69,865 3,96,647 6,15,73,218 5,11,92,570 1,07,77,295 Total (A+B) 49,89,48,074 6,33,570 49,83,14,504 41,43,03,508 8,46,44,567 Where, (A) - Total input tax credit availed on goods and services which are used during the year by the applicant which are commonly used for both manufacturing of ink in Varnika(IMU) as well as manufacturing of rupee note in the Printing Press. As per Rule 42 this will be denoted as T . (B) - Input Tax Credit availed on goods or services which are exclusively used for further supply to Salboni Unit as Outward Taxable Supply from Printing Press or Varnika (IMU) such as raw materials, packing materials, spares or consumables, including ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nly used for both taxable and exempted supply during FY 2019-20 as per Rule 42 of the CGST Rules, 2017. 5.9 Belated claim of ITC Reversal of ITC: The applicant has claimed the ITC pertaining to previous financial year in subsequent financial year within the time prescribed as per Section 16 (4) of the CGST Act, 2017. During the financial year 2019-20, on goods or services which the applicant is eligible to claim ITC, was omitted to be considered and claimed as ITC during FY 2019-20. The said claim of ITC was claimed by the applicant in the return filed during the Financial Year 2020-21 up to September 2020 return filing due date or filing of Annual Return, whichever is earlier as per Section 16 (4) of the CGST Act, 2017. While computing reversal of ITC as per Section 17(2) 17(6) of the CGST Act, 2017 read with Rule 42 of the CGST Rules, 2017 as the ITC on inputs and input services claimed by the applicant is used for both taxable supply and exempted supply and the ITC claimed relates to FY 2019-20 the Value of Exempted Supply E' and Value of Total Turnover of State (GSTIN) 'F' in the formula as per Rule 42 of ibid., was considered as the turnover rel ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... manufactured in Varnika (IMU) is captively consumed by the Printing Press Unit in Mysuru unit towards printing of rupee note as well as the said ink manufactured by Varnika (IMU) is also transferred to the Salboni Unit for the purpose of printing rupee notes. In addition, the Mysuru unit also transfers inventory items occasionally on case to case basis such as raw materials and packing materials to Salboni unit, both the units are considered as distinct person as per Section 25(4) of the CGST Act, 2017. Such transfer of ink and inventories between branches located in two different states is considered as a supply between distinct person and liable for levy of GST as it is a supply of goods between distinct person as per Section 7(1)(c) read along with Entry No.2 of Schedule I of the CGST Act, 2017, hence the applicant clear such goods from the Mysuru unit to Salboni unit being a taxable supply under GST after discharging applicable rate of tax. 6.5 As per Section 7 of the CGST Act, (1) For the purposes of this Act, the expression supply includes- (a) all forms of supply of goods or services or both such as sale, transfer, barter, exchange, licence, rental, lease or dis ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... supply of goods and services in accordance with Section 16 of the CGST Act, 2017. The provision is reproduced below for reference; 16. (1) Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person. (2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless, - (a) 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 recip ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ered person should be in possession of tax invoice. ii. The said goods or services must have been received. iii. Returns must have been filed under Section 39 of CGST Act, 2017. iv. Subject to the provisions of Sec 41, the tax charged in respect of supply has been actually paid to the government. Even though the applicant is maintaining separate books of accounts for Varnika (IMU) and printing press unit, they need to be looked as one business, which constituent a whole business for the purposes of availment of ITC, as the units belongs to a single GSTIN. In other words, both printing press unit and Varnika (IMU) together constitute the business of the applicant. As per the eligibility criteria mentioned above ITC on inputs and inputs services can be availed by the registered person if the said goods or services are used or intended to be used, in the course or furtherance of his business. 6.12 As per Section 16 (1) of ibid., one of the key ingredients to take ITC is the registered person should have used or intended to use goods or services in the course or furtherance of his business. The word 'business' is defined under sub-section (17) of Section 2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... acture, etc.' The word 'business' though extensively used is a word of indefinite import. In taxing statutes, it is normally used in the sense of an occupation, a profession - which occupies time, attention and labour of a person, normally with a profit motive and there must be a course of dealings, either actually continued or contemplated to be continued with a profit motive and not for sport or pleasure - State of AP Vs H. Abdul Bakhi Bros AIR 1965 SC 531. Even if such profit motive is statutorily excluded from the definition of business', yet the person could be doing 'business'. 16. The words carrying on business require something more than merely selling or buying, etc. Whether a person 'carries a business' in a particular commodity must depend upon the volume, frequency, continuity and regularity of transactions of purchase and sale in a class of goods and the transactions must ordinarily be entered into with a profit motive - Board of Revenue Vs AM Ansari (1976) 3 SCC 512 . Such profit motive may, however, be statutorily excluded from the definition of 'business' but still the person may be carrying on business . 6.13 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ental or ancillary to the commencement or closure of such trade, commerce, manufacture, adventure or concern. If the main activity is not business, then any transaction incidental or ancillary would not normally amount to 'business' unless an independent intention to carry on 'business' in the incidental or ancillary activity is established. 6.16 As had been stated above, the main and dominant activity of the trust in furtherance of its object was to spread message. Hence, such activity did not amount to 'business'. Publication for the purpose of spreading message was incidental to the main activity which the trust did not carry as business. 6.17 In case of Commissioner of Gift Tax Vs P. Gheevarghese, Travancore Timbers and Products (1972) 4 SCC 323 , while explaining the meaning of the phrase in the course of business in the context of Gift Tax Act, 1958, it was observed that the phrase in the course of carrying on of business means that the gift should have some relationship with the carrying on of the business. There should be some integral connection or relation between the making of the gift and the carrying on of the business. 6.18 In c ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... . [Art. 286 (1) (b), Constitution of India] 6.23 In the course of means 'during' the winding up. Jadunath Roy. V. Bank of Calcutta Ltd., AIR 1952 Cal 506. [Banking Companies Act, 1949, S. 45A 45-B] The Expression in the course of in Art 286 (1) (b) postulates that the transaction of sale must be an integral part of the activity of exporting the goods out of the country. Mahadeo Ram Bali Ram v. The State of Bihar, AIR 1959 Pat 30. 6.24 The term 'in the course of business' is defined in The Law Lexicon - The Encyclopaedic Law Dictionary - 4th Edition In the course of business means in the way that business (which may be of a purely private or trivial nature) is conducted. Md. Yusuf v. D., AIR 1968 Born 112. [India Evidence Act (1 of 1872), S. 32 (2)] The expression in the course of business in Section 32 (2) of the Indian Evidence Act (1 of 1872), means in the way that business (which may be of a purely private or even trivial nature) is conducted. It has no connection with a course of business, which suggests a series of acts of business; the section would therefore apply to an act or of acts of a simple and private nature. ( 167 IC 30: 4 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e allowed as factories are located in remote areas and for smooth running of business, residential colony for employees necessary near factory. It was settled law that if value of input services is included in the assessable value on which central excise duty was discharged on finished goods, they would constitute input services for allowing credit. In this case, a Cost Accountant certificate was produced by the appellant indicating that expenses on aforesaid services were included in costing of finished goods, thus forming a part of assessable value of finished goods. Thus, it was held that the aforesaid services relate to business activity only. 6.29 In Commissioner of Central Excise Vs Reliance Industries Ltd 2018 (15) GSTL 366 (Tri-Mum), it was held that it is a settled proposition that credit of tax paid on those inputs services cannot be denied whose cost included in assessable value of manufactured goods. Instant case, undisputedly cost of insurance of plant and machinery, inputs, other goods and factory building and residential township is included in valuation of final product on which Excise duty is paid in terms of certificate of Cost Accountant. 6.30 In Ultr ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ike lawn mowing, garbage cleaning, maintenance of swimming pool, collection of household garbage, harvest cutting, weeding, etc are also input services and credit would be eligible thereon. This case was also upheld by the High Court of Andhra Pradesh as reported in 2013 (32) STR 288 (AP). The High Court observed that staff colony provided by assessee being directly and intrinsically linked to its manufacturing activity could not be excluded from consideration and services such as lawn mowing, garbage cleaning, maintenance of swimming pool, collection of household garbage, harvest cutting, weeding, etc were crucial for maintaining the staff colony. Thus, they formed input services falling under Rule 2(1) of Cenvat Credit Rules, 2004. 6.34 Commissioner of Central Excise Vs Gail India Ltd 2017 (52) STR 50 (Tri-All.) security services received at assessee's residential colony/ township constructed for providing residence to employees was held qualify as input service under Rule 2(1) of Cenvat Credit Rules, 2004 being service utilized by manufacturer in relation to manufacture of dutiable output. It was observed that residential colony/township located at remote place, ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ded to be used in the course or furtherance of business. The provision is reproduced below for reference; (1) Every registered person shall, subject to such conditions and restrictions as may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person. (Emphasis Supplied) 7.4 The provisions relating to apportionment of credit and blocked credit, specifically block ITC in case where goods or service received by a registered person is used for purpose of business or other than business and when goods or services used for both Taxable and Exempted Supply, as per sub-section (2) of Section 17 of the CGST Act, 2017, the amount of credit shall be restricted to so much of input tax which is attributable to the said taxable supply in the manner prescribed. The provision is reproduced as below: (1) Where the goods or services or both are used by the registered person partly for the purpose of any business and partly f ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... urposes other than business, be denoted as 'T1'; (c) the amount of input tax, out of T', attributable to inputs and input services intended to be used exclusively for effecting exempt supplies, be denoted as 'T2'; (d) the amount of input tax, out of T', in respect of inputs and input services on which credit is not available under sub-section (5) of section 17, be denoted as 'T3'; (e) the amount of input tax credit credited to the electronic credit ledger of registered person, be denoted as C1' and calculated as- C1 = T- (T1+T2+T3); (f) the amount of input tax credit attributable to inputs and input services intended to be used exclusively for effecting supplies other than exempted but including zero rated supplies, be denoted as T4'; (g) 'T1', 'T2', 'T3' and T4' shall be determined and declared by the registered person at the invoice level in FORM GSTR-2 3 and at summary level in FORM GSTR-3B; (h) input tax credit left after attribution of input tax credit under clause (f) shall be called common credit, be denoted as C2' and calculated as- C2 = C1- T4; (i) the amount of in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd of the financial year to which such credit relates and the said person shall be liable to pay interest on the said excess amount at the rate specified in sub-section (1) of section 50 for the period starting from the first day of April of the succeeding financial year till the date of payment; or b. where the aggregate of the amounts determined under sub-rule (1) in respect of D1' and 'D2' exceeds the aggregate of the amounts calculated finally in respect of D1' and 'D2', such excess amount shall be claimed as credit by the registered person in his return for a month not later than the month of September following the end of the financial year to which such credit relates. (Emphasis Supplied) 7.6 Analysis of above rule, makes it clear that amount of ITC proportionately needs to be reversed by the Mysuru Unit as per the above-mentioned formula prescribed under Rule 42 of ibid., as there are various variables, that are used in the formula, such variables are tabulated below for a quick reference; Variable Formula Particulars T - ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... based on the above-mentioned formula for a tax period (month) and continue the same based on the above-mentioned variables numbers available for each month. Similarly, after end of the financial year, as the annual numbers for the above said variables are available, based on above formula the proportionate ITC to be reversed will be recomputed, upon determination of such amount of proportionate ITC for a financial year, which shall be final for that financial year. The same will be compared with, the aggregated amount of proportionate ITC reversed on monthly bases by the applicant, which results in excess or short reversal of proportionate ITC. In case of short reversal by the applicant, the differential amount need to be reversed along with interest as per Section 50 (1) of the CGST Act, 2017 and in case of excess reversal, the same can be reclaimed by the applicant, before the due date for filing return for the month of September following the end of the financial year, to which such input tax credit relates. As the applicant has claimed the ITC for FY 2019-20 during the September 2020, the applicant has computed the reversal of ITC in the following manner as a whole for the year ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h are stock transferred to Salboni Unit which are leviable to GST, on such items the applicant has claimed ITC and Forwarding Charges on Sale of Ink to SPMCIL as the said supply is exclusively used for taxable supply ITC on such goods and services claimed during the FY 2019-20 amounts to ₹ 6,33,570/- on inputs which are used for the above mentioned identified Taxable Supplies being exclusively used for Other than Exempted Supply including Zero Rates Supply, which is referred as (T4), which results in determination of Common Credit; Common Credit = [C2 = (C1 - T4)] = [₹ 49,89,48,074 - ₹ 6,33,570] C2 = ₹ 49,83,14,504/- 7.12 The turnover details for financial year 2019-20 of the Mysuru Unit is as follows (i) Supply of Exempted Goods (Bank Rupee Note) ₹ 1338,94,66,801/-, (ii) Supply of Taxable Goods (Ink) ₹ 2,66,89,79,350/-, (iii) Supply of Scrap Other Taxable Supplies ₹ 4,60,89,265/- from the above, the amount of ITC attributable towards exempt supplies shall be determined as follows for the financial year: 7.13 ITC att ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... , was omitted to be considered and claimed as ITC during FY 2019-20. 7.17 The said claim of ITC was availed by the applicant in the return filed during the month of September 2020, as per the provisions the applicant is entitled to claimed the said ITC during Financial Year 2020-21 upto September 2021 return filing due date or filing of Annual Return, whichever is earlier as per Section 16 (4) of CGST Act, 2017. While computing reversal of ITC as per Section 17(2) 17(6) of the CGST Act, 2017 read along with Rule 42 of the CGST Rules, 2017 as the ITC on input and input services claimed by the applicant is used for both taxable supply and exempted supply and the ITC claimed relates to FY 2019-20 the Value of Exempted Supply 'E' and Value of Total Turnover of State 'F' in the formula as per Rule 42 of ibid., was considered as the turnover relating to the financial year 2019-20. 7.18 The claim of ITC was made by the applicant in the return filed by the applicant during September 2020 pertaining to FY 2020-21, as the ITC related to credit availed by the applicant belongs to FY 2019-20. The value of Exempted Supply and Value of Total Turnover of the State of FY ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Rule 42 (1) of the CGST Rules, 2017 the term 'T' denotes total input tax involved on inputs and input services in a tax period, the Input Tax Credit available during the month shall be denoted. When the said rule is used for computation of reversal of ITC on annual basis for the financial year as a whole as per Rule 42(2) of the CGST Rules, 2017 on annual basis for the financial year the term T' denotes the ITC available for the financial year as a whole as per .. financial year to which such credit relates .. from the above, it is clear the Input Tax Credit and all other variables has to be decided based on the year for which ITC relates the reversal need to be determined. Hence the ITC was taken in the returns as per Sec 16(4) of the CGST Act, 2017 during September 2020, however the Value of Exempted Supply and Value of Total Turnover of the State will be relating to FY 2019-20 and the reversal of ITC will be based on Value of Total Turnover and Value of Exempted Supply of FY 2019-20. PERSONAL HEARING PROCEEDINGS HELD ON 07-10-2021 8. Shri Ganesh Prabhu B, Chartered Accountant Authorised Representative of the applicant appeared for personal hearing proceed ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Township Security Services, Maintenance of Water Treatment Plant, Horticulture, Maintenance of Residential Quarters, Maintenance of Information System (Computers, Software Electronic Equipment), Maintenance of Sewage Treatment Plant etc., which are utilized for both taxable as well as exempted supplies of Varnika (IMU) and printing press of rupee note, at Mysuru. 12.3 The applicant, in this regard, quoting the definition of 'business', defined under Section 2(17) of the CGST Act, 2017, relying on some case laws wherein the phrase in the course or furtherance of business has been dealt with and by applying the ratio of said decisions and the terms explained, contends that the term 'in the course or furtherance of his business', is defined widely in the above context, it can be understood that common facilities which are shared between the printing press unit and IMU in Mysuru Unit such as (i) CISF Township Security Services, (ii) Maintenance of Water Treatment Plant, (iii) Horticulture, (iv) Maintenance of Residential Quarters, (v) Maintenance of information system (Computers, software and electronic equipment) (vi) Maintena ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... pplicant submitted that they are having an MOU with the Ministry of Home Affairs for utilizing the services of CISF for the safety and security of Mysuru unit, as it is a highly sensitive place, which consists of Printing Press, Varnika (IMU) and residential township for employees CISF. The CISF guards the entire area of Printing Press, Varnika (IMU) and township, for any threats. It is observed that the CISF services are utilized for taxable [Varnika (IMU)] and exempted [Printing press residential township] supplies and hence the applicant is entitled to avail credit, which shall be restricted to the input tax attributable to the taxable supplies including zero-rated supplies. It is an admitted fact that the printing press is an exempted supply and therefore applicant is not eligible to avail ITC of tax paid on the supplies used for it. Further the credit on the services used for residential township is not available to the applicant as it is not related to their business. Therefore ITC in respect of CISF services is restricted to only to the extent they are attributable to taxable supplies in terms of Section 17 (1)/17(2) of the CGST Act 2017. b) Township Security ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... of the applicant company is carried out through an outsourced agency by way of an Annual Maintenance Contract. The applicant has not clearly specified that the said maintenance pertains to printing press or Varnika (IMU) or both. The credit of the said maintenance will not be available if it pertains to only printing press; if it pertains to both printing press and Varnika (IMU), then the said services are utilized for both taxable supplies and exempted supplies, in which case the credit shall be restricted to the input tax attributable to the taxable supplies including zero-rated supplies, in terms of Section 17 (2) of the CGST Act 2017. On the other hand if the said service used exclusively for Varnika (IMU), the credit would be available to the applicant, in full, as it is used for taxable supply only. g) Maintenance of Sewage Treatment Plant : Waste water generated in the printing press, Varnika (IMU), residential area and BNPMIPL paper mill are treated in sewage treatment plant and The treated water is used for gardening purpose. The Operation Maintenance (O M) of the said plant, eluding necessary manpower, is outsourced by the applicant. The O M of the said S ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ceed to consider examine the third question i.e. Turnover of which financial year to be considered in Rule 42 of the CGST Rules, 2017 while calculating ineligible ITC for the invoices which were accounted in the books of accounts in the FY 2019-20, however ITC was claimed during April to September of FY 2020-21 as per section 16(4) of the CGST Act, 2017? Manner of claim of ITC is determined in terms of Rule 42 of the CGST Rules, 2017 and the impugned issue is not covered under Section 97(2) of the CGST Act, 2017 and hence this authority refrains from giving any ruling in this regard. However, it is observed that the turn over of 2019-20 only need to be considered as the Rule 42 of the CGST Rules 2017 is applicable only for a particular tax period only 13. In view of the foregoing, we pass the following RULING 1. Whether ITC can be claimed on common services which are utilized for both taxable as well as exempted supplies? Ans : This question is not covered under the issues referred to in Section 97 (2) of the CGST Act 2017, in respect which an applicant can seek advance ruling and hence this authority refrains from giving any ruling in this regard. ..... X X X X Extracts X X X X X X X X Extracts X X X X
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