Reversal of Input Tax Credit on Invisible Loss

THE HIGH COURT OF JUDICATURE AT MADRAS
DATED: 11.08.2021
CORAM
THE HONOURABLE DR. JUSTICE ANITA SUMANTH
W.P. Nos.14166, 14176, 14171, 14173 & 14175 of 2021
and
WMP. Nos.15052, 15054, 15055, 15046 & 15051 of 2021

M/s.R.K.Ganapathy Chettiar
Rep. by its Partner
138, Mathur Road,
Veeranampalayam, Kangeyam. ... Petitioner in all WPs

vs

The Assistant Commissioner (ST),
Kangeyam Assessment Circle, Kangeyam. ... Respondent in all WPs

For Petitioner : Mr.R.L.Ramani, Senior Counsel
(in all WPs) for Mr.B.Raveendran
For Respondent : Mr.T.N.C.Kaushik
(in all WPs) Government Advocate

COMMON ORDER

1. The above order has been passed in the context of TNVAT and would be applicable to the facts and legal position in this case as well. The sole distinction is that the commodity in that case was steel whereas the product in the present case is Ghee and this difference is not material.

2. The petitioners are engaged in the manufacture of MS Billets and Ingots. MS scrap is an input in the manufacture of MS Billets and the latter, in turn, constitutes an input for manufacture of TMT/CTD Bars. There is a loss of a small portion of the inputs, inherent to the manufacturing process. The impugned orders seek to reverse a portion of the ITC claimed by the petitioners, proportionate to the loss of the input, referring to the provisions of Section 17(5)(h) of the GST Act.

3. No input tax credit shall be allowed to any registered dealer in respect of any goods purchased by him for sale but given away by him by way of free sample or gift or goods consumed for personal use.

4.These writ petitions are allowed. No costs. Connected Miscellaneous Petitions are closed.

Please find attached the enclosed file for the full judgement