Case Law Details
In re M/s Shri Keshav Cement and Infra Limited (GST AAR Karnataka)
Question 1: Whether the company is eligible to take input tax credit as ‘inputs/capital goods’ or ‘input services’ of the items enlisted in Annexure-4 of this application in terms of Section 16 and 17 of the CGST/ KGST/ IGST Act? Additionally, whether the capital goods and inputs constitute plant and machinery of the Applicant which are used in the business of Manufacturing Cement and hence not blocked input tax credit under section 17(5) of the CGST/ KGST/ IGST Act?
Goods, the value of which has been capitalized in the books of account would not be considered as inputs and the applicant will not be entitled to credit of input tax in relation to such goods. From the list of the goods given in Annexure 4 to the application it cannot be inferred as to where capitalization has been done. Therefore in respect of each and every entry of the annexure specific order cannot be made. Therefore the applicant is entitled to input tax credit in respect of goods other than capital goods. In respect of the second part of the question it is Ruled that only those apparatus, equipment, and machinery which are fixed to earth by foundation or structural support alone are entitled to qualify as plant and machinery. Therefore the goods answering to this definition alone shall be qualified to be treated as ‘plant and machinery’. In respect of other goods provisions of Section 17(5)(c) shall apply and credit of input tax shall not be available.
Question 2: Whether the Applicant Company is permitted to avail the entire input tax credit of the enlisted items in Annexure 4 of this application, being used towards the electric energy generated from the captive power plant and transmitted to the cement manufacturing plants which are physically located at distinct locations within the State of Karnataka in terms of section 17(1) and 17(2) of the CGST/KGST/IGST Act and subsequently utilize the same for payment of output tax on cement sold by the Applicant?
The applicant shall be entitled to the eligible input credits (as decided in question 1) in entirety provided the entire production is captively consumed (emphasis supplied).
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