Case Law Details
In re Kanayalal Pahilajrai Balwani (Siddharth Foods) (GST AAR Gujarat)
Whether or not there is requirement for reversal of input tax credit on goods used as raw material in manufacturing of expired cakes & pastries that were kept in display for use in course or furtherance of business.
The applicants admits that subject cakes & pastries kept in display, to fascinate consumers, are of perishable nature and cannot be preserved for longer period. During personal hearing, the applicant was requested to clarify the mode of disposal of expired cakes and pastries, to which the applicant submitted that they throw away the expired Cakes & Pastry.
We hold that Cakes and pastry have limited shelf life and after expiry these bakery items are prohibited from sale. We draw our attention to Section 7 of Prevention of Food and Alteration Act, 1954 prohibiting the sale of expired goods as such are not fit for consumption. Further section 273 Indian Penal Code criminalizes the act of sale of harmful perishable food products. We hold the act of throwing away expired cakes and pastries is akin to destroying the expired food products, for the applicant destroys by throwing them away.
Subject matter is covered under section 17(5) (h) of CGST Act and thereby ITC on inputs used in manufacturing expired cakes & pastries is not admissible and required to be reversed.
Please become a Premium member. If you are already a Premium member, login here to access the full content.
