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TMI Blog2021 (7) TMI 1370X X X X Extracts X X X X X X X X Extracts X X X X ..... Authority for Advance Ruling No. 01/2021 dated 18.01.2021. 3. BRIEF FACTS OF THE CASE i) The appellant M/s Jaideep Ispat And Alloys Pvt. Ltd, a company registered under the Companies Act (hereinafter referred to as 'the appellant') is registered under the Central Goods and Services Tax Act, 2017 and the Madhya Pradesh State Goods and Services Tax Act, 2017 (hereinafter referred to as the "GST Act") having the registration number23AABCJ4896R4ZQ. ii) The appellant manufactures M.S. billets in its factory located at Pithampur. For the purpose of manufacture, the appellant procures various scrap iron and sponge iron which is melted in their factory and converted to M.S. billets which are supplied by the appellant to various customers on payment of applicable GST thereon. iii) As a standard operating procedure for procurement of such scrap and sponge iron (hereinafter referred to as "the concerned inputs"), the appellant maintain various documents, the details of which are given herein below. That, the appellant maintains an ERP system whereby the same procedure is followed for all procurements of the concerned inputs and related entries are made in their accounting software ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... AAAR) The following question, which is the very same as posed before AAR, have been posed before the Appellate Authority: - Whether the procedure adopted and the documents/records maintained by the appellant (as elaborated below) can be deemed to be a sufficient compliance of the conditions and restrictions for the admissibility of input tax credit of the tax paid on inward supply of local scrap and sponge iron used by the appellant for manufacture of M.S. billets as per Section 16 of GST Act and Rule 36 of GST Rules? 7. GROUNDS OF APPEAL Aggrieved by the rejection of the application for advance ruling, the appellant has filed this appeal dated 19-02-2021 under Section 100 of the CGST Act, 2017 and MPGST Act, 2017, on the following grounds:- i) Appellant submits that, the Advance Ruling Authority erred in ruling that this issue is procedural in nature. ii) That, the Advance Ruling Authority failed to see that the question is not about the procedure to be followed, but rather about whether the procedure adopted and documents and records kept is sufficient compliance of the conditions required for availment of input tax credit. iii) That, the question posed before the Advan ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... intained, and all the procedural requirements are followed with as detailed below, then the input tax 'credit in respect of the concerned inputs should be deemed to be admissible. Thus the compliance can be deemed "sufficient" if the prescribed conditions are complied with. The appellant would like to make the following submissions in respect of the above. Possession of tax paying documents ix) As per Rule 36 of the GST Rules, input tax credit shall be availed by a registered person on the basis of any of the following documents - a. An invoice issued by the supplier in accordance with Section 31 b. An invoice issued under the provisions of Section 31(3)(f) c. A debit note issued by the supplier in accordance with Section ?4 d. A bill of entry or any similar document for integrated tax on imports e. Any Input Service Distributor invoice or any such document x) Appellant submit that, in respect of the concerned inputs, as per the established procedure, the appellant shall be in possession of the tax invoice as described in Section 31 of the GST Acts on the basis of which the input tax credit shall be availed. xi) For further substantiating the details mentioned ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... addition to various other documents issued by the supplier showing the quantitative details of the concerned inputs. d. Further, after the weighment of the material upon arrival, a Goods Receipt Note (GRN) is also generated. This GRN is generated at the time of making an entry in the ERP accounting system of the appellant. Hence, the records of the goods showing the concerned inputs are also updated in the accounting system and the related quantitative details are automatically updated in the stock register of the appellant recording receipt of the goods. e. After this, a quality inspection report is generated wherein the quality of the material is verified, and it is ensured that the quality is in accordance with the agreed norms as agreed between the appellant and the vendor. When the quality is also termed satisfactory, a requisite entry is entered in the ledger account of the vendor wherein a liability is recorded in the accounting system and the vendor's account is credited showing the purchase. f. As mentioned previously, the purchase entry is supported on the basis of these documents - (a) purchase invoice generated by the vendor; (b) LR or consignment note ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... eturn filed under Section 37 by the supplier, shall not exceed 5 per cent of the eligible credit available in respect of those invoices/debit notes the details of which have been uploaded by the supplier in a return filed under Section 37 by the supplier. xxi) Appellant submits, that the availability of input tax credit is largely dependent on whether the supplier has uploaded the details of the supplies in a return filed under Section 37, i.e. GSTR-1 return of the supplier/vendor. Hence, the appellant submit that, it is important to ensure that the vendor has in fact uploaded the details of the supplies made to the appellant in their GSTR-1 return. xxii) The appellant claims that these conditions are fulfilled in the following manner: a. The appellant is taking all the precautions to ensure that the vendor have uploaded their own GSTR-1 and GSTR-3B return. This can be verified on the electronic GST Portal. The GST Portal allows all the persons to verify whether any person registered in GST has filed their returns or not. This can be done through the "search taxpayer" option on the portal which allows anybody to see the filing schedule of any registered person. b. On the ba ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... n business to carry out the responsibility of checking the compliance of each and every supplier. xxv) An extract from the above mentioned decision of Hon'ble High Court is reproduced below:- Extract from decision of the High Court in W.P. (C) 2106/2015 At the outset, it requires to be understood that Section 2 (1) (r) of the DVAT Act implicitly recognizes that when the buyer pays the seller the price for the purchase of goods, such price is inclusive of the DVAT for which the seller is -liable" to pay to the Government. Which is why it talks of payment by the buyer of the liability that is essentially that of the seller. VAT is an indirect tax, the incidence of which can be passed on and is in fact passed on by the seller to the purchaser. To be eligible for ITC, the purchasing dealer who, apart from being registered under the DVAT Act, has to take care to verify that the selling dealer is also a registered dealer and has a valid registration under the DVAT Act. The second condition is that such registered selling dealer has to issue to the purchasing dealer a "tax invoice" in terms of Section 50 of the DVAT Act. Such tax invoice would obviously set out the TIN number ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... capable of honest compliance will fail in achieving its objective. xxvi) Appellant further submit that the departmental appeal against the above order of the High Court in the Hon'ble Supreme Court was dismissed by the Hon'ble Apex Court of India. Therefore, even the Supreme Court upheld the principles laid in the above decision by the Hon'ble High Court of Delhi. Thus, it should be deemed that the recipient has fulfilled their obligation under law to check that the supplier was registered under law, and have made payment to such supplier on a bona-fide basis Therefore, input tax credit should not be denied to the appellant after such necessary ac on has been taken by the appellant. xxvii) Appellant submits that, reliance is also further placed on the following decisions - 1. COMMISSIONER OF C. EX., RAIGAD Versus JAY IRON & STEEL INDUSTRIES LTD. 2015 (325) E.L.T. 130 (Tri. - Mumbai) wherein it is held that Cenvat credit - Inputs - Onus on assessee under Rule 9(2), 9(3), 9(4) and 9(7) of Cenvat Credit Rules, 2004 to take reasonable steps to ensure that appropriate excise duty paid on inputs on which credit is taken - Explanation to sub-rule provides that assessee ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on which tax is payable on reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereon, in such manner as may be prescribed: xxx) Appellant submits, that it can be inferred from above, that if payment of the consideration along with applicable tax thereon is not made to the supplier within 180 days from the date of invoice, then the entire amount of input tax credit shall be added to the output tax liability of the recipient. In other words, the input tax credit claim has to be reversed if the payment of consideration is not made to the supplier. xxxi) Appellant submits that, they are making sure that the payment is made to the supplier within 180 days from the date of invoice. For this purpose, whenever the payment is made, a payment voucher is issued from the system and kept in the records with the appellant evidencing the due payment. In some cases, advance payment is made to the vendor for the concerned inputs ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... as well as the submission made at the time of personal hearing and the submission made by circle in charge of Circle-3, Commercial Tax Department (SGST), Indore. 10. We find that the appellant has contended that the Advance Ruling Authority erred in ruling that this issue is procedural in nature. The appellant further contended that the question raised before the Advance Ruling Authority is not procedural in nature and is specifically asking whether the conditions for availment and admissibility of input tax credit are being fulfilled or not. We find that Section 97(2) of the CGST Act, 2017 governs the questions on which advance ruling can be sought under the Act. Here we will look into Section 97(2) of the CGST, Act, 2017 which is reproduced below: 97(2) The question on which the advance ruling is sought under this Act, shall be in respect of- (a) classification of any goods or services or both; (b) applicability of a notification issued under the provisions of this Act; (c) determination of time and value of supply of goods or services or both; (d) admissibility of input tax credit of tax paid or deemed to have been paid; (e) determination of the liability to pay t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... Act. As per clause 84 of section 2 of CGST Act a "person" includes- (a) an individual; (b) a Hindu Undivided Family; (c) a company; (d) a firm; (e) a Limited Liability Partnership; (f) an association of person or a body of individuals whether incorporated or not, in India or outside India; (g) any corporation established by or under any Central Act, State Act or Provincial Act or a Government company as defined in clause (45) of section 2 of the Companies Act, 2013; (h) any body corporate incorporated by or under the laws of a country outside India; (i) a co-operative society registered under any law relating to co-operative societies; (j) a local authority; (k) Central Government or a State Government; (l) society as defined under the Societies Registration Act,1860; (m) trust; and (n) every artificial juridical person not falling within any of the above; We find that both GST Numbers belongs to same company and company in its entirety is a person as defined in Section 2(84) of CGST Act. We find that, even though M/s Jaideep Ispat And Alloys Pvt. Ltd has got a new registration for Unit-II, however it is still the same unit which was investigated unde ..... X X X X Extracts X X X X X X X X Extracts X X X X
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