GST Cafe | Input Tax Credit on CSR Activities not eligible: Gujarat AAR September 30, 2021
Published in: GST Cafe
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In a recent ruling, the Gujarat Authority for Advance Ruling (the ‘GAAR’) in the case of M/s Adama India Private Limited (the ‘Applicant’) observed that CSR activities are excluded from normal course of business of the applicant and therefore not eligible for Input Tax Credit, as per Section 16(1) of the Central Goods and Services Tax Act, 2017 (the ‘CGST Act’).
The Applicant, engaged in the business of supply of insecticides, fungicides and herbicides, spent mandatory amount on CSR Activities in the form of donations to the Government relief funds/educational societies, civil works, installation of plant and machinery and items in schools or hospitals, distribution of food kits, medical equipment etc. In the view of the above, the Applicant sought ruling on whether the inputs and input services procured by the applicant, in order to undertake the mandatory CSR activities, qualify as being in the course and furtherance of business and therefore be counted as eligible ITC in terms of the CGST Act.
The GAAR relied upon Rule 4(1) of the Companies (CSR Policy) Rules, 2014 and Rule 2(d) of Companies (CSR policy) Amendment Rules 2021, which provide that the CSR activities shall not include activities undertaken in pursuance of normal course of business. Further, reliance was placed on Section 16(1) of the CGST Act, which provides that a registered person is entitled to take credit of input tax charged on any supply of goods or services or both, which are used or intended to be used in the course or furtherance of the business.
In the present facts, as CSR activities are excluded from normal course of business of the Applicant, therefore are not eligible for ITC, as per Section 16(1) of the CGST Act.
For any further information/ clarification, please feel free to write to:
Mr. Shammi Kapoor, Partner at [email protected]
Ms. Swati Agarwal, Principal Associate at [email protected]
Mr. Manik Sharma, Associate at [email protected]
 AR No. GUJ/GAAR/R/44/2021 dt. 11.08.2021DOWNLOAD NEWSLETTER