The entire amount of the input tax credit is admissible on the capital goods used for taxable and supplies – West Bengal AAR

Metro Dairy Ltd. [Order No.23/WBAAR/2019-20 (A.A.R. – GST – West Bengal)]

Facts- The applicant has set up a manufacturing facility for UHT milk, milkshake, curd and lassi. Some of the goods are taxable, and others exempted under the GST Act. Commercial production of UHT milk taxable goods has been going on since December, 2018. Manufacture of other products is likely to begin soon. The applicant has procured capital goods and input services that are common to the production of both taxable and exempted goods.

There is a question before AAR that to what extent and in what proportion the input tax credit is admissible on such capital goods and input services.

Held- The Authority of Advance Ruling held that as per Rule 43 of GST Rules, the applicant is required to compute the admissible amount of the input tax credit on the capital goods used for both taxable and exempt supplies in the tax periods over the useful life of such capital goods, calculated from the date of invoice. The applicant shall reverse the balance amount of the input tax on the said capital goods that has already been credited to its electronic credit ledger. As the commercial production of exempted goods did not begin in 2018-19, the entire input tax on input services, subject to the provisions under Rule 42(2) of the GST Rules, is an admissible credit during 2018-19.

To read the complete judgment 2019 Taxo.online 970