In re Srinivas Plywoods (GST AAR Karnataka)
The Authority for Advance Ruling (AAR) Karnataka issued a detailed ruling in the case of M/s. Srinivas Plywoods regarding several queries under the GST Act. Here’s a summarized overview of the case:
Background
M/s. Srinivas Plywoods, located in Hubli, Karnataka, applied for an Advance Ruling under Section 97 of the CGST Act, 2017, and KGST Act, 2017. They sought clarification on three main issues:
- Input Tax Credit (ITC) on Renting of Commercial Property
- Applicability of Reverse Charge Mechanism (RCM) on Inward Freight
- Set-off of Input and Output in cases of multiple business operations under the same GST number
Proceedings and Findings
i. Input Tax Credit on Renting of Commercial Property: The applicant asked if they could claim ITC on building materials used for constructing a commercial complex which was later rented out. The AAR noted a relevant case pending in the Supreme Court related to the eligibility of ITC in such scenarios (M/s. Safari Retreats Private Limited v. Chief Commissioner of CGST). Since the matter was sub judice, the AAR declined to provide a ruling until the Supreme Court’s decision.
ii. Applicability of RCM on Inward Freight: The audit report by the Deputy Commissioner of Commercial Taxes raised an objection regarding non-payment of tax on freight charges. The AAR invoked the first proviso to Section 98(2) of the CGST Act, which states that an application cannot be admitted if the question raised is pending or decided in other proceedings concerning the applicant under the GST Act. Therefore, this issue was deemed inadmissible for an AAR ruling.
