In re Aditya Industries (GST AAR Himachal Pradesh)
From the reading of section 97(2)(d) of CGST Act, 2017, it is very much clear that the advance rulings can be sought regarding admissibility of input tax credit in cases where tax has been paid or deemed to have been paid which clearly implies that in cases where tax has not been paid or not deemed to have been paid advance ruling can not be sought under the provisions of CGST Act, 2017.
Now we see the questions that have been sought by the applicant for issuance of advance ruling.
Questions raised in the amended application.
1. Whether the Input Tax credit is admissible to the applicant where the tax collected by the Supplier from the applicant is not paid to the Government in cash but the same is reflecting in GSTR 2A of the applicant
2. Whether the Input Tax credit is admissible to the applicant where the tax collected by the Supplier from the applicant is paid to the Government through utilization of ineligible input tax credit but the same is reflecting in GSTR 2A of the applicant
From the careful reading of all the questions in the original as well as amended application, all the cases pertain to a scenario where tax has not actually been paid. Even in cases where tax has been paid by the supplier to the government through ineligible input tax credit it would always deemed not to have been paid as tax has not actually been paid to the government. When the applicant is sure as is evident in the application that tax has not been paid in cash or has been paid through ineligible input tax credit, it clearly implies that either tax has not been paid or deemed not to have been paid. Therefore, we find that in all the mentioned cases, it can not be regarded as tax paid to the government by any stretch of mind.
Thus, in view of the provisions laid down in section 97(2) of the CGST Act, 2017 encompassing the specific questions, which are sought under advance ruling, it can decisively be inferred that the questions raised by the respondent before Advance Ruling Authority were beyond the scope and jurisdiction of Advance Ruling, and hence do not warrant any ruling thereon and therefore in view of the provisions of Section 97 of the CGST Act, 2017, we find that this authority is not allowed to answer the subject question.
FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING,HIMACHAL PRADESH
PROCEEDINGS
(Under Section 98 of the Central Goods and Service Tax Act, 2017 and the Himachal Pradesh Goods and Service Tax Act, 2017)
The present application has been filed under Section 97 of the Central Goods and Services Tax Act, 2017 and the Himachal Pradesh Goods and Services Tax Act, 2017 [hereinafter referred to as “the CGST Act and HPGST Act’ respectively] by M/s., Aditya Industries, Trilok Pur Road Industrial road, Kala Amb, District Sirmour (H.P.) the applicant, seeking an advance ruling in respect of the following questions.
Q1: Whether the input tax credit availed by the applicant is subject to rejection solely on the ground that the tax collected by the supplier of the raw material from the applicant is not paid to the government in cash
Q2: Whether the input tax credit availed by the applicant is subject to rejection solely on the ground that the tax collected by the supplier of the raw material from the applicant is paid to the government through utilization of ineligible input tax credit.
At the outset, we would like to make it clear that the provisions of both the CGST Act and the HPGST Act are the same except for certain provisions. Therefore, unless a mention is specifically made to any dissimilar provisions, a reference to the CGST Act would also mean a reference to the same provision under the HPGST Act. Further to the earlier, henceforth for the purposes of this Advance Ruling, the expression `GST Act’ would mean CGST Act and HPGST Act.
2. FACTS AND CONTENTION — AS PER THE APPLICANT
The submissions of the applicant are as under: –
2.1 That the applicant is a partnership firm running under the name and style of M/s Aditya Industries situated at Industrial Area, Trilokpur road, Kala Amb, Tehsil Nahan, Distt. Sirmour, Himachal Pardesh originally registered under the provisions of Himachal Pradesh Value Added Tax Act, 2005 (HP VAT Act’) and under Central Sales Tax Act, 1956 vide TIN No. 02040400174 and migrated into GST vide GSTIN 02AAKFA1378H1ZP.
2.2 That the applicant, is engaged in the manufacture of various iron and steel items namely TMT Bars under HSN 7214, Ingots under HSN 7207 etc, all chargeable to GST @ 18%, whereas the major raw materials is MS Scrap (HSN 7204), Sponge Iron (HSN 7203) and Silicomanganese (HSN 7202), all attracting GST @ 18%.
2.3 That the major raw material i.e. MS Scrap (HSN 7204) procurement is made from the registered scrap dealers, who while making the outward supply charges goods and service tax (hereinafter referred as “tax”) at prescribed rate in the Tax Invoice from the applicant in compliance with the Central Goods and Service Tax Act, 2017 (hereinafter referred as “CGST Act, 2017”)
2.4 That in order to safeguard any wrong trade practices from the scrap dealers, which is an unorganized sector, the applicant has adopted a policy where the payment in relation to tax component charged by the scrap dealer on Tax Invoice (i.e supplier of raw material) is made upon matching the details of inward supplies made by the applicant from the respective supplier with the details as appearing GSTR 2A of the applicant, which is a self-generated return on the basis of the data reported by the respective supplier in their return of outward supply i.e GSTR 1 for the respective month.
2.5 That the applicant makes the payment in relation to tax component only after ensuring that the supplier of raw material (i.e. Scrap dealer) has filed his return of outward supply i.e. GSTR 1 and the relevant Tax Invoices against the outward supply from the supplier, is reported by the supplier is his GSTR 1 by matching the Tax Invoices with GSTR 2A appearing on the applicant’s portal against the inward supplies made by the applicant.
2.6 That the applicant makes all the remittances against consideration for raw material procured or freight charges for transportation by road through banking channel which can be linked through bank statements.
2.7 That the applicant takes all the bona fide steps and measures to ensure that all the relevant conditions as provided under Section 16(2) of the CGST Act, 2017 is fulfilled. The extract of the relevant provision is as under:
“S.16(2): Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services of both to him unless, –
(a) He is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed;
(b) He has received the goods or services or both
(c) Subject to the provisions of section 41, the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilization of input tax credit admissible in respect of the said supply; and
(d) He has furnished the return under section 39:
Provided further that where a recipient fails to pay to the supplier of goods or services or both, other than the supplies 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 outward tax liability, along with interest thereon, in such manner as may be prescribed”
2.8 That to sum up the conditions as given in Section 16(2) read with Section 17(5) to decide the eligibility of Input tax credit and position of the applicant on fulfilment of such conditions are as follows:
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