The Karnataka Authority for Advance Ruling (AAR) has held that the Chamundeshwari Electricity Supply would be eligible for Input Tax Credit (ITC).
The applicant, Chamundeswari electricity supply is a limited company engaged in distribution of electricity and sale of energy. Sale of energy was exempted as per serial number 104 of Notification No 2/2017-Central Tax (Rate), dated 28-06-2017 Similarly, transmission and distribution of electricity was exempted as per serial number 25 of Notification No.1272017-Central Tax (Rate), dated 28-06-2017
The applicant states that they purchase power from Central and State generating stations, major independent power producers and independent power producers from
non-conventional sources like wind, solar and mini hydel. The Corporation supplies and distributes power to various consumers, such as, companies, industries, commercial shops etc.
The applicant has sought advance ruling as to whether input tax credit could be availed by the applicant.
Y.C Shiva kumar on behalf of the applicant submitted that, the input services of the Corporation were transmission charges, open access charges, repair and maintenance expenses etc and all the input services except transmission charges and open access charges were incurred GST.
He further submitted that the applicant could claim input tax credit on input and input services against output taxable supplies of support and auxiliary services also and other supply of taxable goods. On these output taxable supplies of support and auxiliary services, a registered person could claim input tax proportionately.
The Authority for Advance Ruling of Ravi Prasad (state member) and Kiran Reddy T (central member) observed that, As per Section 16(1) of CGST Act 2017 every registered person would be entitled to take credit of input tax charged and input tax means tax charged on any supply of goods or services or both made to him.
Goods or services procured by the applicant and capitalised, if used or intended to be used in the course or furtherance of business, then the applicant would be entitled to take credit of input tax.
Regarding the input tax credit on auxiliary services, subject to section 17(2) of the CGST Act read with Rule 42 and 43 of CGST Rules, the applicant would be eligible to claim input tax credit on the inward supply of services against output taxable supplies of support and auxiliary services and other supply of taxable goods, further observed.
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