Taxontips
No Result
View All Result
Thursday, February 2, 2023
  • Home
  • Income Tax
    • Income Tax Return
    • Tax Notice/ Personal consultation
    • Compliance Notice
    • Faceless Assessment
  • GST
    • GST Registration
    • GST Consultation
  • News
    • Income Tax News
    • GST news
    • Budget News
    • Business & Other News
  • Q & A
  • About us
  • Contact us
Talk to an Expert
  • Home
  • Income Tax
    • Income Tax Return
    • Tax Notice/ Personal consultation
    • Compliance Notice
    • Faceless Assessment
  • GST
    • GST Registration
    • GST Consultation
  • News
    • Income Tax News
    • GST news
    • Budget News
    • Business & Other News
  • Q & A
  • About us
  • Contact us
No Result
View All Result
Taxontips
No Result
View All Result

ITC on inputs used in manufacturing expired cakes & pastries is not admissible and required to be reversed: Gujarat AAR

GST expert by GST expert
September 12, 2021
in Case Laws, GST news
0
Salary/ remuneration paid to directors also liable for GST under Reverse charge – Advance ruling Rajasthan
103
SHARES
1.3k
VIEWS
image_pdfPDFimage_printPrint

Brief Facts:

The applicant M/s. Kanayalal Pahilajrai Balwani, (Sidharth Foods), (hereinafter referred to as applicant for the sake of brevity), are engaged in the business of manufacturing & distribution of cakes & pastries items.

The applicant send cakes & pastries to the distributors to keep them in display to fascinate consumer. The cakes & pastries are of perishable nature and cannot be preserved for longer period and on regular interval all cakes & pastries kept in display have to be compulsorily replaced after expiry of said bakery item.

The applicant submits that display assists them to achieve the objectives of continuing to conduct the business of manufacturing and selling cakes & pastries in future also.

The applicant submitted that there is no free/sample supply of extra cakes & pastries to distributors. Such extra cakes & pastries are supplied with tax invoice which means that supply of goods is taxable supply.

When such extra cakes & pastry expired and return back to the applicant , assessee issues credit note for the same. Hence, there is no free/sample supply of goods by the taxpayer as per section 17(5) (h) of the CGST Act, 2017.

 

B. Question on which Advance Ruling sought

The applicant has sought the Advance Ruling on the following question:

“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.”

 

Findings:

At the outset we would like to make it clear that the provisions of CGST Act, 2017 and GGST Act, 2017 are in pari materia and have the same provisions in like matter and differ from each other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act would also mean reference to the corresponding similar provisions in the GGST Act.

We have carefully considered all the submissions made by the applicant in the subject application as well as those made by applicant at the time of personal hearing.

The Ruling is sought on whether ITC on inputs consumed in expired Cakes & Pastries is to be reversed or otherwise.

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.

We draw attention to the ‘ Non Obstante subsection’ – Section 17(5) of the CGST/SGST Act, 2017 stipulating ‘ Blocked Credit’. Section 17(5)( h) of CGST Act, 2017 reads as follows:-

“(5) Notwithstanding anything contained in sub-section (1) of section 16 and sub-section (1) of section 18, input tax credit shall not be available in respect of the following, namely:-……………….……………………….
(h) goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples

This Non-obstante sub section overrides the operation of section 16 and section 18 of CGST Act provisions contrary to this subsection and thereby blocks ITC admissibility contrary to the said sub section. We find that subject goods being destroyed are covered under this non obstante clause (h) of section 17(5) CGST Act.

Further, Government Circular No. 72/46/2018-GST dated 26.10.2018 issued vide F. No.CBEC/20/16/ 04/2018-GST has clarified the procedure in respect of return of time expired drugs or medicines-Reg. Relevant Para’s of said Circular are enumerated as follows :

“3 B (d) Further, where the time expired goods, which have been returned by the retailer/wholesaler, are destroyed by the manufacturer, he/she is required to reverse the ITC attributable to the manufacture of such goods, in terms of the provisions of clause (h) of sub-section (5) of section 17 of the CGST Act.

It may be noted that though this circular discusses the scenarios in relation to return of goods on account of expiry of the same, it may be applicable to such other scenarios where the goods are returned on account of reasons other than the one detailed above.”

12. We hold that subject matter presents a similar scenario as envisaged at para 4 of cited Government Circular dated 26-10-2018.

 

Ruling:

In Conspectus of aforementioned findings, we hold that 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.

 

Our Comments:

Although this ruling has relied upon the circular of CBIC to rule that ITC on input goods needs to be reversed if final products is expired and destroyed. However there have been various advance ruling in Mumbai wherein it has been held that section 17(5)(h) deals with raw materials and not finished goods and hence if finished goods are destroyed ITC need not be reversed.

However, after this advance ruling one needs to be more cautious.

 

To download the full judgement CLICK HERE.

 

You can book phone consultation/ assistance online with expert as mentioned below:

To book ITR filing with experts CLICK ME.

To book phone consultation with experts for any Income tax related matters CLICK ME.

To book consultation for Faceless Assessment with experts CLICK ME.

To book phone consultation with experts for GST related matters CLICK ME.

To book general phone consultation with expert CLICK ME.

image_pdfPDFimage_printPrint
Tags: advance rulingGST AAR rulingGST updatestaxontips
Previous Post

CBDT issues clarification regarding carry forward of losses in case of change in shareholding due to strategic disinvestment

Next Post

Mismatch of GSTR 3B data in Form 26AS | Incorrect GST turnover in Form 26AS

Related Posts

GST registration
GST news

2nd highest Gross GST collection in January 2023, breaching earlier 2nd highest record in the Month of October 2022

February 1, 2023
Further clarification by CBIC for claiming 20% ITC on invoices not available in GSTR – 2A. Circular 123/42/2019 – GST
GST news

Clarification on entitlement of ITC where place of supply is determined in terms of proviso to sub-section (8) of section 12 of the IGST Act

January 27, 2023
GST Registration cancelled if GSTR 3B not filed for past 6 months or more. Want to know why?
GST news

Advisory on facility of ‘Initiating Drop Proceedings’ of Suspended GSTINs due to Non-filing of Returns – Update

January 24, 2023
Further clarification by CBIC for claiming 20% ITC on invoices not available in GSTR – 2A. Circular 123/42/2019 – GST
GST news

Clarification regarding the treatment of statutory dues under GST law [Read circular]

January 21, 2023 - Updated on January 27, 2023
Annual return optional for F.Y. 2017-18 and 2018-19 for Turnover below Rs. 2 crore
GST Returns

Clarifications regarding applicability of GST on certain services based on 48th GST council meeting

January 20, 2023
Data of GST website under comparison of liability declared and ITC claimed tab not available
GST news

Module wise new functionalities deployed on the GST Portal for taxpayers – December 2022

January 17, 2023
Next Post
Form 26AS i.e. annual information statement will now include monthly GST turnover for the relevant year

Mismatch of GSTR 3B data in Form 26AS | Incorrect GST turnover in Form 26AS

Leave a Reply Cancel reply

Your email address will not be published. Required fields are marked *

Google Custom search

Recent Posts

  • [Live] Updates and Tax changes for Budget 2023 | Tax on cryptocurrency | Income tax and GST udpates in Budget 2023 [Download Bill]
  • 2nd highest Gross GST collection in January 2023, breaching earlier 2nd highest record in the Month of October 2022
  • CBDT instructs Income tax officer to complete 148/ 147 assessment before 31.05.2023
  • Final stage of Union Budget 2023-24 commences with Halwa Ceremony
  • Clarification on entitlement of ITC where place of supply is determined in terms of proviso to sub-section (8) of section 12 of the IGST Act

Recent Comments

  • CBDT instructs Income tax officer to complete 148/ 147 assessment before 31.05.2023 - Taxontips on Instructions issued by CBDT in response to judgement passed by Hon’ble Supreme court in case of notice issued u/s 148 after 01.04.2021
  • CBDT instructs Income tax officer to complete 148/ 147 assessment before 31.05.2023 - Taxontips on Supreme court Judgement on controversial issue of notice u/s 148 issued after 01.04.2021 passed in favor of Revenue | Detailed analysis of full judgement
  • Final stage of Union Budget 2023-24 commences with Halwa Ceremony - Taxontips on What is ‘Halwa ceremony’, performed before the budget at Ministry of Finance? What does it signify? | Pre budget facts
  • Leonard Linton on Clarification for the purposes of Section 269ST of the I.T. Act in respect of dealership/distributorship contract in case of Co-operative Societies
  • Advisory on facility of ‘Initiating Drop Proceedings’ of Suspended GSTINs due to Non-filing of Returns - Update - Taxontips on Advisory on “Initiating Drop Proceeding” by taxpayers for non-filing of GST returns

Categories

  • Budget News
  • Business & Other News
  • Case Laws
  • GST news
  • Income Tax News
  • News

Browse Topics by Date

February 2023
M T W T F S S
 12345
6789101112
13141516171819
20212223242526
2728  
« Jan    
  • GSTR 9/ 9C due date to be extended to 31.10.2020 | E-invoicing will be voluntary in the beginning 79.3k views
  • How to pay Membership and COP fees of ICAI for 2020-21 | 77.8k views
  • Code/ Nature of payment 6CR updated by NSDL in challan 281 for paying TCS on sale of goods 68.1k views

Recent Notification

[Live] Updates and Tax changes for Budget 2023 | Tax on cryptocurrency | Income tax and GST udpates in Budget 2023 [Download Bill]

[Live] Updates and Tax changes for Budget 2023 | Tax on cryptocurrency | Income tax and GST udpates in Budget 2023 [Download Bill]

February 1, 2023
GST registration

2nd highest Gross GST collection in January 2023, breaching earlier 2nd highest record in the Month of October 2022

February 1, 2023

RSS Taxontips

  • [Live] Updates and Tax changes for Budget 2023 | Tax on cryptocurrency | Income tax and GST udpates in Budget 2023 [Download Bill]
  • 2nd highest Gross GST collection in January 2023, breaching earlier 2nd highest record in the Month of October 2022
  • CBDT instructs Income tax officer to complete 148/ 147 assessment before 31.05.2023
  • Final stage of Union Budget 2023-24 commences with Halwa Ceremony
  • Clarification on entitlement of ITC where place of supply is determined in terms of proviso to sub-section (8) of section 12 of the IGST Act
  • Consequences of Accepting cash while selling a Immovable property, land or house | 100% Penalty
  • How many articles can a Chartered Accountant register for articleship?
  • Advisory on facility of ‘Initiating Drop Proceedings’ of Suspended GSTINs due to Non-filing of Returns – Update
  • ICAI has launched free task management or practice management software for members in Practice
  • Clarification regarding the treatment of statutory dues under GST law [Read circular]

Categories

  • Budget News
  • Business & Other News
  • Case Laws
  • GST news
  • Income Tax News
  • News

Site menu

  • Home
  • Income Tax
    • Income Tax Return
    • Tax Notice/ Personal consultation
    • Compliance Notice
    • Faceless Assessment
  • GST
    • GST Registration
    • GST Consultation
  • News
    • Income Tax News
    • GST news
    • Budget News
    • Business & Other News
  • Q & A
  • About us
  • Contact us
Taxontips

TaxOnTips provides you all tax related solutions in easy way and update you with its regular updates & notifications Visit us for details.
We are based in Jaipur, India

© 2019-2021 Taxontips.com - Tax assistance at your Fingertips

No Result
View All Result
  • Login/Signup
  • Income Tax
    • Income Tax Return
    • Tax Notice/ Personal consultation
    • Compliance Notice
    • Faceless Assessment
  • GST
    • GST registration
    • GST Consultation
  • News
    • Income Tax News
    • GST news
    • Budget News
    • Business & Other News
  • Q & A
  • About us
  • Contact us
  • Ask an expert/ Talk to an expert
  • Privacy Policy
  • Terms of use

© 2019-2021 Taxontips.com - Tax assistance at your Fingertips

Login to your account below

Forgotten Password? Sign Up

Fill the forms bellow to register

All fields are required. Log In

Retrieve your password

Please enter your username or email address to reset your password.

Log In
Book Phone consultation with expert

Sitting home or at your office and don't have time to visit CA's office or don't know where to consult CA. Book your consultation with an expert practicing Chartered Accountant and get your query solved.

Book a phone consultation for 30 minutes with our expert at a very basic cost.

Book consultation

No thanks, I'm not interested!

ITR 1 to 7 now available for FY 2021-22!!File your ITR with an experienced Chartered Accountant

Now File your Income Tax return for F.Y. 2021-22 with an Experienced Practicing Chartered Accountant and not just with any person like other websites offer. Return filing starts at Rs. 500/-

Book ITR filing with Expert

Never see this message again.

Subscribe for Latest Tax Updates
You name
Yourname@email.com

Never see this message again.