If petrol pump is selling petrol/diesel and lubricants, whether input credit in respect of GST paid on various expenses has to be claimed proportionately in terms of sec 17(2) or full credit is to be claimed. Petrol/diesel are presently nil rated whereas lubricant is taxable?

Reply

In this regard a clarification was given by the government in response to a query asked by whether ONGC would be eligible to avail credit of five per cent GST paid on specified goods procured by it for petroleum operations. The clarification is as follows:

"The main output of ONGC viz. Crude Oil and Natural Gas are outside levy of GST and output would be subject to levy of existing taxes viz. VAT/CST etc. Accordingly, since GST is not payable on output, the credit of input would not be available. However, in few cases in Gujarat and Mumbai where some value added products (VAP) are being manufactured which are covered under GST, credit on common inputs would be available on proportionate basis. In few cases, the credit would be available on invoice level for inputs which are meant for exclusive use for supply of value added products.

Therefore, ITC availability will depend on the following:

1) Relating to taxable supplies - Full ITC will be available. 
2) Relating to Exempt Supplies - ITC will not be available. 
3) Relating to both taxable and exempt supplies - ITC will be available proportionately to turnover in relation to taxable supplies to the total turnover