In re Gujarat Narmada Valley Fertilizers & Chemicals Ltd (GST AAAR Gujarat)
Gujarat AAAR Disallows ITC on Expenses Incurred for Buyback of Shares as Securities are Outside GST Purview
The Gujarat AAAR in Gujarat In the matter of M/s. Gujarat Narmada Valley Fertilizers & Chemicals Ltd. [Advance Ruling Appeal No. GUJ/GAAAR/APPEAL/2025/17, order dated September 22, 2025] held that Input Tax Credit (ITC) is not admissible on expenses incurred for the buyback of shares, as shares being ‘securities’ do not qualify as goods or services under the GST law, and hence the transaction falls outside the ambit of GST.
Facts:
Gujarat Narmada Valley Fertilizers & Chemicals Ltd. (“the Appellant”), a State Public Sector Undertaking, engaged in fertilizers and chemicals, undertook a share buyback program in December 2023 as part of its business restructuring.
Assistant Commissioner, CGST & Central Excise Division VII, Bharuch representing revenue authorities, contested the eligibility of ITC claimed by the Petitioner on expenses related to the share buyback.
The Appellant argued that expenses incurred on the share buyback, including professional, legal, and consultancy fees, contributed to the furtherance of its business and thus qualified for ITC under Section 16 of the CGST Act. They relied on various contentions including that the buyback is an essential business activity.
