ITC not permitted for food and beverages that are consumed in the industrial canteen, rules AAR

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The Maharashtra Authority of Advance Ruling (AAR) ruled that the pre-tax credit (ITC) is not allowed on food and beverages consumed in an industrial canteen.

The applicant, Ordnance Factory Chanda (OFCh), the applicant, is a unit of the Ordnance Factories Board (OFB) under the Department of Defense Production and Supply. Ministry of Defense, Government of India. Established in 1964, OFCh’s main business is the production of various types of ammunition such as bombs, grenades, cartridges, missiles, etc. It is also engaged in the production of explosive and non-explosive components such as initiator. Primer, detonator, paper components and packages. The above products are mainly supplied to Indian Defense and Military Forces. Some of the products are also supplied to Ordnance sister factories that use such goods in their production and manufacturing process. OFCh also supplies a small part of its manufactured goods to the state police. Public defense companies such as Bharat Dynamics Ltd, Home Office units and defense laboratories such as Defense Research & Development Laboratory.

The applicant requested a preliminary ruling on whether the “Defense Formation for Preparing and Preparing E-Waybills” exemption applies to arms factories and other central government and public enterprises (PSUs) under the Ministry of Defense; whether exemption from paying GST for the transportation of “military or defense equipment by a cargo carrier” for goods transported by an organization; Whether the use of a creditable input tax credit on advance payments and advance payments in connection with the main business activity of manufacturing against GST liability is permissible in the rental of real estate; Whether input tax deduction is allowed in relation to personnel services that are rented for industrial canteens and liquefied gas cylinders that are refilled for use in industrial canteens; and whether a pre-tax credit is allowed on pharmaceuticals purchased at the factory hospital and other pre-tax supplies used in the factory hospital.

The Rajiv Mangoo and TRRamnani coram ruled that the “Defense Formation for the Creation and Creation of E-Waybills” exception applies to Ordnance factories and other Central Government and Public Enterprises (PSUs) under the Ministry of Defense.

The agency ruled that the exemption from paying the GST for the transportation of “military or defense equipment by a cargo transportation agency applies to goods carried by organizations.

The AAR determined that the use of a creditable input tax credit on intermediate consumption and advance consumption in connection with the main business activity of manufacturing is not permissible against the GST liability for the rental of real estate.

The AAR said the pre-tax credit is not allowed on staff services that are rented for industrial canteens and liquefied gas cylinders that are refilled for use in industrial canteens.

Finally, the AAR decided that the pre-tax credit for pharmaceuticals purchased in factory hospitals and other input and input tax services used in factory hospitals is permissible and would apply from 02/01/2019, rather than the previous period.

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