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TMI Blog2022 (7) TMI 443X X X X Extracts X X X X X X X X Extracts X X X X ..... e of Section 97(2)(d) since the admissibility of input tax credit on the common input service will depend on whether the same are used in the course or for the furtherance of his business and whether the services are blocked under Section 17(5). The lower Authority has failed to answer this question stating that Section 97(2) does not cover situations governed by Section 17(2) of the CGST Act. It is found that the lower Authority has not appreciated the question in the proper perspective. In their application for advance ruling, the Appellant has stated that certain input services are used by them both in the manufacturing of ink and rupee notes as well as in the residential quarters in the township. In this context, the Appellant has sought a ruling whether the credit on such commonly used services can be availed. This question undoubtedly involves examining the admissibility of credit on the common input services which are used by them in their Mysuru unit in the course or for the furtherance of business - The lower Authority was incorrect in not giving a ruling on this question. We will however, not go further and decide this question on merits as this Authority is not empowered ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 98(4) of the Act which means that the application has been admitted. Appeal disposed off. - KAR/AAAR/03/2022 - - - Dated:- 6-7-2022 - SMT. RANJANA JHA, AND SMT. SHIKHA C, MEMBER Represented by : Shri. Ganesh Prabhu Balakumar CA Authorised representative Shri. Ravikumar B.S, Assistant Manager BRBNMPL PROCEEDINGS (Under Section 101 of the CGST Act, 2017 and the KGST Act, 2017) 1. At the outset we would like to make it clear that the provisions of CGST, Act 2017 and SGST, Act 2017 arc 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 CGST Act would also mean reference to the corresponding similar provisions in the KGST Act. 2. The present appeal has been filed under section 100 of the Central Goods and Service Tax Act 2017 and Karnataka Goods and Service Tax Act 2017 (herein after referred to as CGST Act, 2017 and SGST Act, 2017) by Bharatiya Reserve Bank Note Mudran Pvt Ltd, Note Mudran Nagar, BRBNMPL Township, KRS Road, Metagalli, Mysuru 570003 (herein after referred to as A ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... aintenance of Sewage Treatment Plant (STP), etc. 5. The Appellant approached the Authority for Advance Ruling (AAR) seeking a ruling on 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 located in Mysuru? b. Whether the 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 2020-21 as per Section 16(4) of the CGST Act, 2017? 6. The AAR vide its order KAR ADRG No 06/2022 dated 8 th March 2022 refrained from giving a ruling on any of the above three q ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... at the time of taking credit but at all points of time during the financial year. 7.3. The Appellant submitted that the AAR has failed to appreciate the fact that Section 17(2) of CGST Act read along with Rule 42 of the CGST Rules also has a bearing on admissibility of ITC on input services attributable towards taxable supplies and exempt supplies; that the expression 'admissibility' means 'allowing of ITC of taxes paid or deemed to have been paid'; that the admissibility of credit will be dependent on the Appellant satisfying the provisions of Section 16; that the ITC should not be blocked under Section 17(5) and in the case of common credits, the ITC should be admissible only to the extent attributable to taxable supplies in terms of Section 17(2); that the manner in which the credit is attributed to taxable supplies is laid down in Rule 42 of the CGST Rules; that the usage of the term 'determination' in the heading of Rule 42 signifies that it is the determination of admissible ITC. They argued that when the intention of Rule 42 is to ascertain the quantum of admissible credit attributable towards the taxable supplies, taking a contradictory stand that ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d representative explained the facts of the case and the circumstances leading to the present appeal. He submitted that the Appellant manages two currency printing press units, one at Mysore and the other at Salboni, West Bengal, both of which are registered under GST; that the unit at Mysuru also has an ink manufacturing unit (Varnika) engaged in the manufacturing of ink which is used for printing the currency notes; that the supply of currency notes to RBI is exempted from GST as per Notf No 02/2017-CT (Rate) dated 28-06-2017. However, the ink supplied to Salboni and to Security Printing and Minting Corporation of India Ltd, is taxable supply and GST is paid on the same; that the Mysuru unit receives various input services which are used commonly by the ink manufacturing unit and the printing press; that they have proportionately claimed ITC on the input services used in connection with taxable supply and have reversed ITC to the extent of exempted supply; that the common facilities which are shared between the printing press unit and Varnika in Mysuru such as CISF Township Security services, Maintenance of Water Treatment Plant, Horticulture, Maintenance of residential quarter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ority on the grounds that the questions are outside the scope of Section 97(2) is incorrect and bad in law. 10. The short point for determination by us is whether the lower Authority was correct in not giving a ruling on the following three questions raised by the Appellant in their application:- Whether ITC can be claimed on common services which are utilized by Vamika IMU and the printing press at Mysuru, for both taxable as well as exempted supplies? Whether the method followed in connection with claiming input tax credit is in accordance with law? Which financial year's turnover is to be considered while calculating ineligible ITC under Rule 42 of CGST Rules, when the inward supply invoices were accounted in the books of account for 2019-20 but ITC claimed during April to September 2020-21? 11. For this let us look into the provisions of law relating to the questions on which an advance ruling can be sought. Section 97(2) of the CGST Act states that the question on which the advance ruling is sought under the Act, shall be in respect of:- (a) Classification of any goods or services or both; (b) Applicability of a notification issued under ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nd 43 of the CGST Rules. Where the goods and services are used by the registered person partly for effecting taxable supplies (including zero-rated supplies) and partly for effecting exempt supplies, the amount of credit shall be restricted to so much of the input tax as is attributable to the taxable supplies (including zero-rated supplies). - Section 17(2). The manner of determining the amount of input tax attributable to taxable supplies is prescribed in Rule 42 and 43 of the CGST Rules. Reversal of input tax credit is required when the goods and services are used by a registered person for making exempt supply which includes a supply on which the recipient is required to pay tax under RCM, transactions in securities, sale of land and sale of building. Reversal of input tax credit is not required when the registered person is carrying out activities or transactions specified in Schedule III of the CGST Act (other than sale of land and building) as they are neither a supply of goods nor a supply of service. - Section 17(3) Banks, Financial institutions and non-banking financial institutions have been permitted to exercise an option every financial year to either fo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Section 97(2) does not cover situations governed by Section 17(2) of the CGST Act. We find that the lower Authority has not appreciated the question in the proper perspective. In their application for advance ruling, the Appellant has stated that certain input services are used by them both in the manufacturing of ink and rupee notes as well as in the residential quarters in the township. In this context, the Appellant has sought a ruling whether the credit on such commonly used services can be availed. This question undoubtedly involves examining the admissibility of credit on the common input services which are used by them in their Mysuru unit in the course or for the furtherance of business. We therefore hold that the lower Authority was incorrect in not giving a ruling on this question. We will however, not go further and decide this question on merits as this Authority is not empowered to do so in appeal proceedings. Section 101(1) of the CGST Act empowers the Appellate Authority to pass such orders either confirming or modifying the ruling appealed against. In this case, since no ruling has been given by the lower Authority on the merits of the question, the Appellate Author ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... h rejection. The order passed under Section 98(2) rejecting the application is not appealable before the Appellate Authority in terms of Section 100 of the CGST Act. If the application for advance ruling is admitted, then a ruling must be passed in terms of Section 98(4) of the CGST Act. A ruling given under Section 98(4) alone is appealable before the Appellate Authority in terms of Section 100 of the said Act. In this case, we find that the lower Authority has passed an order under Section 98(4) of the Act which means that the application has been admitted. However, having admitted the application in terms of Section 98(2) and recording the same in para 4 of the impugned order, the lower Authority has taken a contrary stand in the findings and failed to pass a ruling on all the questions raised in the application. This displays a lack of application of mind on the part of the lower Authority and defeats the very purpose for which the Authority has been constituted. We also observe that in-spite of giving a finding that no ruling can be given on the questions asked by the applicant, the lower Authority has gone ahead to discuss the issues on merits and then has finally concluded t ..... X X X X Extracts X X X X X X X X Extracts X X X X
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