9911796707
TMI Blog2022 (3) TMI 573X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Information System (Computers, Software & Electronic Equipment), Maintenance of Sewage Treatment Plant, etc. which are utilized for both taxable as well as exempted supply of Varnika (IMU) and printing press of rupee note located in Mysuru Unit? b. Whether method followed by the applicant in connection with claiming of Input Tax Credit is in accordance with the provisions of law? c. 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 2020-2 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 states that the Mysuru unit, in addition to the printing press unit, has an exclusive Ink Manufacturing Unit called as "Varnika" (hereinafter referred to as "Varnika (IMU)") engaged in manufacturing of ink which is used for printing of rupee notes. The ink manufactured by the Varnika (IMU), is captively consumed by the Mysuru unit for printing of rupee note as well as the said ink is also transferred to Salboni unit, the branch of the company located in West Bengal for printing of rupee note. Further, the manufactured ink by the Varnika (IMU) is also sold to M/s. Security Printing and Minting Corporation of India Ltd (hereinafter referred to as 'SPMCIL'). The i ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 "exempted supply", the applicant has not claimed or availed the input tax credit in the aforesaid inward supplies. On all the inventory items such as raw materials, spares, consumables and packing materials which are transferred to Salboni unit by the applicant, the applicant has claimed input tax credit, on the relevant inward supply of goods to the extent such items which are transferred, being a taxable outward supply. 5.6 In addition to the above inward supply, following are facilities which are shared in common by the Varnika (IMU) and printing press in Mysuru Unit such as (i) CISF & Township Security Services, (ii) Maintenance of Water Treatment Plant (WTP), ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... (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 common facilities are used for both taxable and exempted supply, they have reversed ITC to the extent of exempted supply. They have claimed the proportionate credit to the extent of taxable supply. 5.7 Input Tax Credit availed by the Applicant: As the ink manufactured in the Varnika (IMU) is captively consumed at Mysuru unit, plus transferred to Salboni unit, being a taxable supply under GST after discharging tax on such supply at applicable rate as per Schedule I of the CGST Act, 2017 and the said ink manufactured by Varnika (IMU) is also sold to SPMCIL, on the said inward supplies of goods or services which are used for both taxable supply and exempted supply, the applicant has proportionately reversed input tax credit on the above menti ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... +C-D) (A) (B) (C) (D) (E) CGST 12,28,608 1,10,738 11,17,870 9,29,408 2,99,200 SGST 12,28,608 1,10,738 11,17,870 9,29,408 2,99,200 IGST 68,47,643 - 68,47,643 56,93,197 11,54,446 Import of Goods IGST 42,49,32,370 - 42,49,32,370 35,32,92,890 7,16,39,480 Import of Service IGST 22,24,840 - 22,24,840 18,49,753 3,75,086 RCM - CGST 53,052 7,723 45,329 37,687 15,367 RCM -SGST 53,052 7,723 45,329 37,687 15,367 RCM -IGST 4,10,035 - 4,10,035 3,40,907 69,128 Subtotal (A) 43,69,78,209 2,36,923 45,329 37,687 36,31,10,938 7,38,67,272 Where, (A) - Total input tax credit availed on goods and services which are used during the year by the applicant on account of manufacturing of ink in Varnika (IMU). 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 Varnika (IMU) such as raw materials, packing materials, spares or consumables and forwarding charges of ink to SPMCIL. As per Rule 42 this will be denoted as "T4". (C) - Common credit attributable towards both taxable supply o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Other than Business purposes. The applicant has not claimed any ITC on Goods or Services which are blocked for availment as per Section 17 (5) of the CGST Act, 2017. ITC Calculation for Press & Varnika (IMU) for the F.Y 2019-20 Particulars Of ITC Total ITC available (A) ITC 100% eligible (B) Common Credit (C = A-B) [Proportionately] Ineligible ITC as per rule 42 (D) Eligible ITC for F.Y 19-20 (E = B + C -D) CGST 43,20,969 - 43,20,969 35,92,495 7,28,474 SGST 43,20,969 - 43,20,969 35,92,495 7,28,474 IGST 8,77,345 3,96,647 4,80,698 3,99,657 4,77,688 RCM CGST 1,06,85,035 - 1,06,85,035 88,83,642 18,01,393 RCM SGST 1,06,85,035 - 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... clusively used for Exempted Supply or ITC on Blocked or In-eligible Credit as per Section 17(5) of the CGST Act, 2017 apart from the above the applicant has also reversed a proportionate ITC amounting to Rs. 41,43,03,508/- which are commonly 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... will be considered as "Exempted Supply". 6.4 The applicant in Mysuru unit also has an ink manufacturing facility called as Varnika (IMU) under the same GSTIN which is engaged in manufacturing of ink, the said ink 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... T. 6.10 The applicant is in receipt of inward supply of goods and services in connection with manufacture of ink and rupee note in Mysuru unit. The applicant claims ITC on inward 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... sed or intended to use them in the course or furtherance of his business. 6.11 Condition for availment of ITC: i. The registered 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... #39;business' is wider than the words 'trade, commerce or manufacture, 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&# ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ture and any transaction in connection with or incidental 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 t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 1953 SC 333, 346. [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: 44 LW ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... re 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 Ultratech Cement Ltd Vs Commissioner o ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... l, 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, where no municipal services available and thus the township was set up ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... uced 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 for other purposes, the amount of credit shall be restricted to so much of the input tax ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... utable 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 input tax credit attributable towards exempt supplies, be denoted as 'D1' and calculated as- D1= (E+F) x C2 'E' is the ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ub-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 - Total input tax credit claimed in a tax period on Inputs and Input Services by the applicant which are used for both manufacture of ink and rupee note. T1 - Inputs and Input Services used or intended to be used exclusively for the purpose other than business by the applicant ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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. 7.8 As per the accounting policy of the applicant for the said GSTIN the applicant maintains two separate books of account based on corporate accounting policy one for the Varnika (IMU) facility and another books for all other aspects including Printing Press Unit, which is for the whole Mysuru unit, during the FY 2019-20 a total input tax credit available amounts to Rs. 49,89,48,074/- (Rs. 43,69,78,209 + Rs. 6,19,69,865) which is referred as (T). 7.9 As there are no activities or transaction on which ITC on input and input services which are exclusively used for the purpose other than business is carried out by the applicant during the financial year. The applicant was not in receipt of any goods or services on which ITC claimed in connection with the above. Hence ITC on inputs or input services which are exclusively used for the purposes other than business, which is referred as (T1) will be Rs. Nil for the tax period and Fina ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... redit; Common Credit = [C2 = (C1 - T4)] = [Rs. 49,89,48,074 - Rs. 6,33,570] C2 = Rs. 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) Rs. 1338,94,66,801/-, (ii) Supply of Taxable Goods (Ink) Rs. 2,66,89,79,350/-, (iii) Supply of Scrap & Other Taxable Supplies Rs. 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 attributable towards Exempted Supply [D1= (E+F) x C2], the value of exempted supply of goods for the financial year 2019-20 shall be Rs. 1338,94,66,801/-, which is referred as (E) and the value of total turnover in the state for the said GSTIN for financial year 2019-20 shall be Rs. 16,10,45,35,416/-, which is referred as (F), and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... omputing 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 2019-20 was considered in the formulas as per Rule 42 of ibid., by the applicant. 7.19 As per Section 17(2) of the CGST Act, 2017 "Where the goods or services or both are used by the registered person partly for effecting taxable supplies including zero-rated supplies under this Act or under the Integrated Goods and Services Tax Act and partly for effecting exempt supplies under the said Acts, the amount of credit sha ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... e 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 proceedings held on 07-10-2021 and reiterated the facts narrated in their application. FINDINGS & DISCUSSION 9. At the outset we would like to make it clear that the provisions of CGST Act, 2017 and the KGST Act, 2017 are in pari-materia and have the same provisions in like matter and differ from each other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGS ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d 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) Maintenance of Sewage Treatment Plant, etc. would be entitled as eligible ITC as they are used in the course or furtherance of business of both Varnika (IMU) and Printing Press unit. 12.4 Section 16 of the CGST Act 2017 deals with eligibility and conditions for taking input tax credit; Section 16 (1) stipulates that every registered person shall 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 ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... 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 Services : The applicant submitted that a private security agency is engaged to guard the day-to-day activities, inside the residential township, such as guarding of residential area, movement of outside vehicles and persons etc., and the GST is paid on RCM basis. It is observed that the services of a private security agency have been utilized for guarding the residential area and hence the said services are not related to the business of the applicant. Therefore, the credit is not availab ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... able 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 STP is not an input service, as it is not used for any outward supply and hence the same is not related to the business of the applicant. Therefore, the credit is not available to the applicant on the said services used. 12.7 Now we proceed to consider & examine the second question i.e. whether the method followed by the applicant in connection with claiming of Input Tax Credit is in accordance with the provisions of law? In this regard, we invite reference to Section 97 (2) of the CGST Act 2017, which specifies the issues on which the advanc ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ving 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. 2. Whether the method followed by the applicant in connection with claiming of Input Tax Credit is in accordance with the provisions of law? Ans : The impugned question is not covered under Section 97(2) of the CGST Act 2017, which specifies the issues on which the advance ruling can be sought by the applicant and hence this authority refrains from giving any ruling. 3. 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 I ..... X X X X Extracts X X X X X X X X Extracts X X X X
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