9911796707
TMI Blog2025 (4) TMI 229X X X X Extracts X X X X X X X X Extracts X X X X ..... the details as submitted by the applicant are as under: * that the applicant, is a public limited company as per the Companies Act, 2013 and its shares are listed on the stock exchange; * that they had initiated a share buyback programme1 in December 2023; * that they are eligible for ITC on the expenditure incurred towards buyback of its shares; that the buyback of shares is an activity undertaken in the course or furtherance of business. 3. The applicant has further stated that buyback of shares improves company's financial standing, creates value for shareholders, contributes prestige & promotes the Company's image, reduces equity capital, leads to improved shareholders return; that it is a simple way to pay off investors & reduce ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s, business continuity and stability would per se amount to an activity in course or furtherance of business; * that the buyback program constitutes a business activity undertaken to achieve its core objectives; that the definition of 'Business' u/s 2 (17) of the CGST Act, 2017, depicts that the definition is inclusive and encompassing various activities. * that clause (b) of the definition of 'business' encompasses activity like buyback of share or issue of shares' by a limited company as these activities are incidental or ancillary to the core business operation outlined in clause (a), ibid; * consequently the applicant believes that taxes charged on professional fees, legal fees, arrangement of buyback fees etc. incurred for buybac ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... der the GST regime? 7. Personal hearing was granted on 23.01.2025, wherein Shri Hardik Shah, Ms Heena Patel and Rakesh Kumar B Kayastha, on behalf of the applicant and reiterated the submission already made in the application. Discussion and findings 8. At the outset, we would like to state that the provisions of both the CGST Act and the GGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to such dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provisions under the GGST Act. 9. We have considered the submissions made by the applicant in their application for advance ruling as well as the submissions made during the course of personal hearing, ad ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ts (Regulation) Act, 1956 (42 of 1956) * Section 2. Definitions .- (h):- "securities" include- (i) shares, scrips, stocks, bonds, debentures, debenture stock or other marketable securities of a like nature in or of any incorporated company or other body corporate; (ia) derivative; (ib) units or any other instrument issued by any collective investment scheme to the investors in such schemes;] (ic)security receipt as defined in clause (zg) of section 2 of the Securitisation and Reconstruction of Financial Assets and Enforcement of Security Interest Act, 2002;] (id) units or any other such instrument issued to the investors under any mutual fund scheme;] (ii) Government securities; (iia) such other instruments as may be dec ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... verse charge basis, transactions in securities, sale of land and, subject to clause (b) of paragraph 5 of Schedule II, sale of building. [Explanation.- For the purposes of this sub-section, the expression "value of exempt supply" shall not include the value of activities or transactions specified in Schedule III, [except,- (i) the value of activities or transactions specified in paragraph 5 of the said Schedule; and (ii) the value of such activities or transactions as may be prescribed in respect of clause (a) of paragraph 8 of the said Schedule.];] 12. Broadly, in terms of sections 16 & 17 of the CGST Act, 2017, every registered person is entitled to take ITC on any supply of goods or services or both used or intended to be used in ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... for availing ITC on the expenditure incurred for the buyback of its shares, it neither being goods nor services, a primary condition for availment of ITC. The applicant is therefore out of the ambit of section 16, ibid and is therefore not eligible to avail ITC on the expenditure incurred for buyback of its shares. 15. The thrust of the applicant's argument is that the expenses incurred towards the buyback of shares is in the course or furtherance of the business activity & therefore, should be considered as eligible expenditure for the purpose of ITC. This averment needs to be examined only if the expenditure incurred is towards goods or services. The term 'securities' is excluded from both goods and services. The primary requirement for ..... X X X X Extracts X X X X X X X X Extracts X X X X
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