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Co-operative society is eligible for availing the option provided under Section 17(4) of the CGST Act which prescribes to avail an amount equal to 50% of eligible credit of input tax, on inputs, capital goods and input services in that month and the rest shall lapse.

Input Tax Credit In the instant case, applicant is a Co-operative society registered with the Central Registrar of Co-operative Societies engaged in the business of accepting deposits and granting loans and advances.

The applicant has sought advance ruling on the following:

i. Whether the applicant is considered as a financial institution as envisaged under 17(4) of the CGST Act.

ii. Whether the applicant is eligible for availing the option provided under Section 17(4) of the CGST Act which prescribes to avail an amount equal to 50% of eligible credit of input tax on inputs, capital goods and input services in that month and the rest shall lapse.

The conditions to be fulfilled for exercising the option under sub-section (4) of Section 17 is that the supplier shall be engaged in supplying services by way of accepting deposits, extending loans or advances and the supplier shall be a banking company, a financial institution or a non-banking financial company.

Admittedly, the applicant is engaged in supplying services by way of accepting deposits, extending loans or advances. Therefore, the issue to be determined is whether the applicant qualifies to be a banking company, a financial institution or a non-banking financial company.

On a conjoint reading of the provisions of clauses (c) and (e) of Section 45-1 of the Reserve Bank of India Act, 1934 it is evident that the applicant being a Co-operative Society registered with the Central Registrar of Co-operative Societies carrying on the business of financing whether by means of making loans or advances or otherwise, of any activity other than its own qualifies to be a “financial institution” as per the Reserve Bank of India Act, 1934 and consequently also under the CGST Act, 2017.

Held that— he applicant satisfies both the conditions to be eligible for exercising the option provided under sub-section (4) of Section 17 of the Central / State GST Act, 2017.—The Knanaya Multi Purpose Co-Operative Credit Society Ltd., In Re… [2020] 24 TAXLOK.COM 074 (AAR-Kerala)

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