Page 178 - GSTL_23rd July 2020_Vol 38_Part 4

544 GST LAW TIMES [ Vol. 38
66. The AAR, Maharashtra ruled that Input Tax Credit in respect of any
of the above shall not be available to Ordnance Factory Bhandara except sub-
question (e), that is, expenditure related to purchase of LPG cylinders used with-
in industrial canteen.
67. The explanation that AAR, Maharashtra gave for denying such
credit was that the goods/services used in such activities are not used or intend-
ed to be used by Ordnance Factory Bhandara in furtherance of its business.
68. Input Tax Credit in relation to sub-question (e), that is, expenditure
related to purchase of LPG cylinders used within industrial canteen was allowed
by AAR, Maharashtra on the pretext that the output supply of food and beverag-
es to employees in industrial canteen is taxable.
69. The Appellant has challenged the above said ruling of AAR, Maha-
rashtra on the following grounds :-
70. The basic question that is being asked here is that whether the fol-
lowing goods/services received by the factory are covered under the definition
of “input” and “input services” as per Section 2(59) & 2(60) of the CGST Act,
2017 respectively & whether such goods/services can be considered to be falling
within the scope of “used or intended to be used in the course or furtherance of
business” as per Section 16(1) of the CGST Act, 2017 so as to entitle Ordnance
Factory Bhandara to avail Input Tax of the said goods/services. It is worthwhile
to note here that Hon. Finance Minister of India stated at paragraph 5(b) of the
Statement of Objects & Reasons while introducing the Central Goods & Services
Tax (“CGST”) Bill, 2017 in the Parliament as under :-
“5. The Central Goods and Services Tax Bill, 2017, inter alia, provides for
the following, namely :-
(b) to broad base the input tax credit by making it available in re-
spect of taxes paid on any supply of goods or services or both used
or intended to be used in the course or furtherance of business.”
71. Hence a clear intent to broad base the input tax credit is evident
from the above. Also, the term “used or intended to be used in the course or fur-
therance of business” has been used to expand the scope of inputs & input ser-
vices to those activities that have some direct or indirect nexus to business of the
supplier.
72. So, it requested to the Hon. Appellate Authority for Advance Rul-
ing to decide upon the admissibility of Input Tax Credit in relation to the follow-
ing services keeping in view the aforementioned intention of the Hon. Finance
Minister of broadening the Input Tax Credit base.
73. Even in the erstwhile laws relating to Excise Duty & Service Tax,
the essential requirement of a service to be considered as “Input Service” for
availing Cenvat credit of the same as per Rule 2(l) of the Cenvat Credit Rules,
2004, was that such service should be used by a manufacturer, whether directly
or indirectly, in or in relation to the manufacture of final products. There is a
plethora of decisions by various High Courts & various Benches of Tribunal
(CESTAT) in which it was adjudged that Cenvat credit of Service Tax in relation
to the following services was allowable on the pretext that such services were
used by the manufacturer, whether directly or indirectly, in or in relation to the
business of manufacture of final products.
74. In the case of Coca Cola India Pvt. Ltd. v. CCE reported in 2009 (242)
E.L.T. 168 (Bom.) = 2009 (15) S.T.R. 657 (Bom.), a Division Bench of the Hon.
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