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TMI Blog2023 (8) TMI 572X X X X Extracts X X X X X X X X Extracts X X X X ..... cannot include alcoholic liquor for human consumption. This claim of the appellant is not tenable. Defining goods in other Acts, does not bar defining the same in any other Acts including GST Act 2017. Clause 12A of Article 366 of the Constitution which was inserted vide Section 14 of the Constitution (101st Amendment) Act, 2016 also establishes alcoholic liquor for human consumption as goods even though that is in exclusion for the purpose of charging GST. It is established that alcoholic liquor for human consumption is goods even under virtue of the Constitution. Section 9 of the GST Act, 2017 provides for levy of GST on intra-state supplies of goods and/or services except on the supply of the alcoholic liquor for human consumption. This provision is in consonance of Clause 12A of Article 366 of the Constitution - Further, as per Section 49(4) of the GST Act, the amount available in the electronic credit ledger may be used for making any payment towards output tax under this Act or IGST Act. So, the objective behind ITC is for making payment towards output tax. Therefore, ITC cannot be allowed for the supplies which are non-taxable. Hence, as alcoholic liquor for human ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... tent of inputs and input services procured for banquet (Almond) and no ITC is being availed in respect of procurement of any goods or services related to the restaurant (GRID). Therefore, the principal question that arises is whether the appellant is required to undertake reversal in terms of Rule 42 to the extent of the turnover that relates to sale of alcoholic liquor for human consumption. Question sought before WBAAR: 6. The Appellant sought an advance ruling under section 97 of the West Bengal Goods and Services Tax Act, 2017/ the Central Goods and Services Tax Act, 2017, (hereinafter collectively referred to as the GST Act ) on the following question: Whether or not the applicant is obliged to reverse ITC under Section 17(2) of the CGST Act read with Rule 42 of the CGST Rules, in view of the sale of alcoholic liquor for human consumption effected by it at its premises under the facts and circumstances of the case? Observations and Findings of WBAAR: 7. WBAAR held that the activities of selling of alcoholic liquor for human consumption by the applicant qualifies as supply under the GST Act. The applicant contends that by virtue of Article 366 (12A). t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... o the exempt supply under sub-section (2) of section 17 of the GST Act read with rule 42 of the GST Rules. Ruling of WBAAR: 10. In view of above, the WBAAR vide Order No. 22/WBAAR/2022-23 dated 09.02.2023 ruled that: Under the facts circumstances of the present case, the applicant is required to reverse input tax credit ( ITC ) in terms of sub-section (2) of section 17 of the GST Act read with Rule 42 of the GST Rules for sale of alcoholic liquor for human consumption. Submissions of the appellant and Grounds of Appeal: 11. The Appellant has filed the instant appeal against the above-mentioned Advance Ruling dated 09.02.2023 with a prayer to set aside/modify the said order or pass any such further or other orders as may be deemed fit and proper in the facts and circumstances of the case on the following grounds. 12. The appellant has stated that WBAAR has erred in stating that alcoholic liquor for human consumption qualifies as goods under GST Law. The appellant mentioned that alcoholic liquor for human consumption is subject under Entry 51 of the State List. The Constitution only empowers the State Government to levy excise duty on alcoholic liquo ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... licant will be discharging GST liability on output supply of alcoholic liquor by way of reversal of ITC. 15. In this context, the Applicant relies upon the maxim Quando aliquidprohibetur fieri, prohibetur ex directo et per obliquum- The maxim denotes the settled position of law that whenever a thing is prohibited, it is prohibited, whether done directly or indirectly. As stated above, tax on goods and services has been defined to unequivocally exclude taxes on alcoholic liquor. Thus, when sale of alcoholic liquor cannot be brought to tax directly, it cannot even be brought to tax indirectly by way of reversal of ITC. Reliance in this regard is placed on the decision in the case of Commissioner of Central Excise, Pondicherry v. Acer India Ltd., (2004) 8 SCC 173, wherein while holding that the value of software pre-loaded into computers cannot be included in the transaction value of such goods for the purpose of levy of excise duty, in the absence of a valid levy tax thereon, the Hon ble Supreme Court held as follows- 84. In other words, computers and softwares are different and distinct goods under the said Act having been classified differently and in that view ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... lso include cases where the inputs on which credits are sought to be claimed have no nexus whatsoever with the output taxable supplies or these are used for non-business purposes. 18. In the present case, as set out in the facts of this application, none of the credit availed by the applicant pertains to purchase of alcoholic liquor for human consumption. To put it differently, the entire credit availed by the applicant pertains to those input goods and input services that have been used in making taxable supplies only. 19. Under these circumstances, if exempted supply is read to include sale of alcoholic liquor for human consumption, even though none of the credits availed by the applicant was on account of procurement of alcoholic liquor for human consumption, then that would (apart from being contrary to the legislative power of the Parliament) run contrary to the very objective of the legislation. This is on the basis that even where the credits have no nexus with the output supply of alcoholic liquor for human consumption and have nexus solely with the taxable goods and services supplied by the applicant, it is nonetheless being asked to reverse part of that credit. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... nce, supply under section 7 of GST Act, 2017 is baseless and therefore, turnover arising out of sale of alcoholic liquor cannot be said to be part of total turnover while computing eligible under Rule 42 of the GST Rules, 2017. (f) It is a settled principle of law that credit of taxes incurred on inputs must be denied where inputs have not been used for making taxable supply (i.e. on which output tax is not payable). This is on the basis that where no output tax is payable, there can ever be any cascading effect of taxes, with regard to taxes incurred on the inputs which have been put to use for making the output supply, and accordingly, concept of input tax credit would be wholly not warranted. This would also include cases where the inputs on which credits are sought to be claimed have no nexus whatsoever with the output taxable supplies or these are used for non-business purposes. In the present case, as set out in the facts of this application, none of the credit availed by the applicant pertains to purchase of alcoholic liquor for human consumption. To put it differently, the entire credit availed by the applicant, even the common credit pertains to those input goods and ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... R 677 to clear that the legislative intent was nowhere to bring alcoholic liquor into the ambit of statute and any reading of the provisions that permits it would only render the provision ultra vires the Constitution. Completely agreeing on this point it should be remembered that in order to understand the legislative intent we need to interpret it according to its true essence and purpose of the law without trying to restrict, condition it by referring other article/section in completely different perspective. e) To sum up, ITC should be reversed since the RTP effects sale of alcoholic Liquor for human consumption in addition to supply of restaurant and outdoor catering services. Personal Hearing: 22. During the course of hearing held on 18.07.2023, the Appellant s authorised representative reiterated the points as stated in the Grounds of Appeal as well as the written submissions. The matter has been examined and written and oral submissions made before us are considered. 23. During the course of hearing, the Appellant s authorised representative mentioned that the appellant provides catering service at the banquet hall The Almond by their own restaurant The ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ticle 366 of the Constitution which was inserted vide Section 14 of the Constitution (101st Amendment) Act, 2016 also establishes alcoholic liquor for human consumption as goods even though that is in exclusion for the purpose of charging GST. 27. Section 14 of the Constitution (101st Amendment) Act, 2016 is reproduced below:- In article 366 of the Constitution,- (i) after clause (12), the following clause shall be inserted, namely:- (12A) goods and services tax means any tax on supply of goods, or services or both except taxes on the supply of the alcoholic liquor for human consumption; In the above definition of Goods and Services Tax , the exclusion is in agreement that alcoholic liquor for human consumption is goods and the taxable event is supply, though GST shall not be levied on it. Therefore, it is established that alcoholic liquor for human consumption is goods even under virtue of the Constitution. 28. Accordingly, Section 9 of the GST Act, 2017 provides for levy of GST on intra-state supplies of goods and/or services except on the supply of the alcoholic liquor for human consumption. This provision is in consonance of Clause 12A of Article ..... X X X X Extracts X X X X X X X X Extracts X X X X
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