Input Tax Credit — The applicant M/s VNR Seeds Pvt. Ltd. Raipur with multiple registrations under GST in various States is involved in the business of supplying seeds (in packaged form using packing materials), for sowing purpose, which is exempted item. They procure taxable packaging materials/commodities etc. which are required for processing and packing of seeds. They also use to transfer aforesaid taxable inputs like packaging materials and other consumables from one branch to another and from one processing unit to another.
The applicant wants to use Input Tax Credit (ITC) on the aforesaid purchased packaging materials and keep credit till they are in their stock. The applicant transfers aforesaid taxable inputs within its own branches situated in various States across India and are required to pay GST merely for these inter-branch transfers. It was thus their contention that they are liable for multiple tax which is against the core principles of GST.
Ruling—The applicant is not entitled to ITC on the packing material used for packaging seeds, while making such exempted supply of seeds to their own branches and to other purchasers. They are however, entitled for ITC (of the tax involved in the purchase of such packing material) on the exclusive taxable supply of such packing material made to their own branches in other States, in terms of section 17(2) of Chhattisgarh Goods and Service Tax, Act 2017. — VNR Seeds (P.) Ltd. In Re…. — [2018] 2 TAXLOK.COM 176 (AAR-Chhattisgarh)