Knanaya Multi-Purpose Co-operative Credit is Financial Institution, eligible for 50% of ITC: AAR

Knanaya Multi-Purpose Co-operative Credit - Financial Institution - AAR - ITC - Taxscan

The Kerala Authority of Advance Ruling (AAR) ruled that the applicant Knanaya Multi-Purpose Co-operative Credit is a financial institution, eligible for 50% of Input Tax Credit (ITC).

The applicant, M/s. The Knanaya Multi-Purpose Co-operative Credit Society Ltd. 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 is engaged in the provision of both taxable as well as non-taxable services and is availing input tax credit as per provisions of Section 17(2) of the CGST/SGST Act. It is stated that the applicant is categorized as a financial institution as per Section 45-I(c) and 45-I(e) of the RBI Act, 1934.

The applicant has sought the advance ruling on the issue whether the applicant is considered as a financial institution as envisaged under 17(4) of the CGST Act and 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 Authority consisting of Joint Commissioner of Central Tax, Shivprasad S. IRS and Additional Commissioner of State Tax, B.S. Thyagarajababu in the light 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.

Therefore, AAR ruled that 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.

Subscribe Taxscan Premium to view the Judgment
taxscan-loader