Page 46 - GSTL_2nd April 2020_Vol 35_Part 1

J12 GST LAW TIMES [ Vol. 35
book of CSR activities discussed above. The answer is in the affirmative since
to win the confidence of the stakeholders and shareholders including the
people affected by the supply of raw material from their locality, say natural
resources like mines and minerals etc., the hazardous emission that may re-
sult in production activities.”
Hon’ble Tribunal have gone further, and held that such CSR activities are business
activities even when it was not mandatory. It held,
“It has been argued by the Ld. AR that in the Rajya Sabha, the Minister of
Corporate Affairs stated on 22-2-2013 that, there is no provision for CSR be-
fore introduction of Companies Bill, 2012 but as found from the handbook re-
ferred, there was existence of such provision (may not be in the form of statu-
tory provision) regarding discharging of CSR activities by the companies as it
says that new guidelines issued by the DPE in April, 2013 would replace two
existing separate guidelines on CSR and sustainable development issued in
2010 and 2011 respectively. Therefore, sustainability is dependent on CSR
without which companies cannot operate smoothly for a long period as they
are dependent on various stakeholders to conduct business in an economical-
ly, socially and environmentally sustainable manner i.e. transparent and ethi-
cal. Hence in my considered view, CSR which was a mandatory requirement
for the public sector undertakings, has been made obligatory also for the pri-
vate sector and unless the same is to be treated as input service in respect of
activities relating to business, production and sustainability of the company
itself would be at stake. The relied upon case laws, which have equated CSR
only with charity and not covered the other aspects of CSR namely triple bot-
tom-line approach (discussed above), corporate citizenship, philanthropy,
(charity just being a part only), strategic philanthropy, share value, corporate
sustainability and business responsibility are of no application to the case on
hand.”
Let us now discuss the provisions of Section 17(5)(h) of the CGST Act, which re-
stricts ITC in certain cases. According to this sub-section, Input Tax Credit is not
available for “goods lost, stolen, destroyed, written off or disposed of by way of
gift or free samples”. It is to be seen that the said sub-section merely places ITC
restriction on free distribution of goods, and does not restrict ITC on provision of
services for free.
Use of goods for CSR activities cannot be equated to “goods disposed of
by way of gift”. Use of goods in CSR activities is not disposal of goods by way of
gift. To “dispose of” means - “to cast aside, chuck out, discard, fling, put away,
throw away, throw out, toss away”. When certain goods are used in business
activities, and not being supplied for consideration, it cannot be said that such
goods are being disposed of. It amounts to amending the very definition of
“availability of ITC” on goods used in or in furtherance of business. The Legisla-
ture has not used the term - “goods or services used for further supply” to allow
ITC. Exception provisions under Section 17 cannot be interpreted in a manner
which supplant the very basic meaning of Input Tax Credit.
It may be noted that Section 16 of the CGST Act provides for general
rule, i.e. input tax credit is available on all goods or services used in or in fur-
therance of business. Section 17 creates exception to the general rule, which is
required to be read reasonably, keeping in mind the very purpose of ITC. Orissa
High Court, while interpreting Section 17(5)(d) of the CGST Act, in case of Safari
Retreats Pvt. Ltd. v. Chief Commissioner of CGST [2019 (25) G.S.T.L. 341 (Ori.)],
held,
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