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GST: ITC can be availed on Equipment, Furniture, Reagents/consumables used for Performing Test, rules AAR [Read Order]

AAR - ITC - furniture - Taxscan

The Karnataka Authority of Advance Ruling (AAR) ruled the Input Tax Credit (ITC) can be availed on equipment, furniture, reagents/consumables used for performing tests.

The applicant, Siddalingappa Palalochna Rakshit is a proprietary concern having brand name of “Bangalore Medical System” and registered under the provisions of the Goods and Services Act, 2017. They are into supply of various reagents/ medical consumables (goods) in addition to provision of diagnostic services.

The applicant has been Molecular Diagnostic services by M/s Kidwai Medical Institute of Oncology, Bengaluru, a Karnataka Government hospital. They have been allotted around 5000 sq. ft. of room space to establish & set up a complete Molecular Diagnostic Laboratory.

The Lab would be a complete clean room which would be built with PUF panels and Air Handling Units, Lab furniture and power backup, equipped with all the latest technology medical lab equipment. All the equipment would be purchased by the applicant and installed at the lab in Kidwai Hospital.

The responsibility of running the lab with all necessary technical staff is also on the applicant. The applicant receives the samples from the patients and issues respective reports and charges Kidwai Hospital as per the approved prices.

The applicant has sought an advance ruling in respect of issues that can the applicant avail GST Input on the equipment, furniture, etc. and on the reagents/ consumables, they would be purchasing for performing the tests as the reagents or consumables are taxable and not the test.

The Authority consisting of Dr. M.P. Ravi Prasad and Mashood Ur Rehman Farooqui noted that the applicant needs to restrict the credit to the amount attributable to taxable supplies including zero rated supplies in the case of both capital goods as well as reagents/consumables or drugs. Further if the applicant claims depreciation on the tax component of capital goods and plant & machinery, under Income Tax Act 1961, the input tax credit on the said tax component shall not be allowed, in terms of Section 16(3) of the CGST Act 2017.

The Authority ruled that the applicant is eligible for input tax credit on the tax paid on the purchases of goods, i.e. equipments, furniture, etc. which are purchased for this project and also on the reagents or consumables which are used for performing the test, subject to the restriction of the same in terms of Section 17(2) of the CGST Act 2017.

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