Case Title | Shilpa Medicare Ltd |
Court | Andhra Pradesh AAAR |
Honorable Judges | Member Peeyush Kumar & Member Naresh Penumaka |
Citation | 2020 (11) GSTPanacea 12 HC Andhra Pradesh ORDER/AAAR/AP/07(GST)/2020 |
Judgement Date | 10-November-2020 |
Council for Petitioner | NA |
Council for Respondent | NA |
Section | Section 18(3) |
In Favour of | In Favour of Appellant |
The Andhra Pradesh Bench of Member Peeyush Kumar & Member Naresh Penumaka has held that Credit (ITC) accumulated under a particular State GST Act cannot be utilized in another State as there is no such provision under the extant law. Therefore, due to the exclusivity of ITC earned in a State, M/s. Shilpa Medicare Limited, Vizianagaram are not entitled to transfer the ITC earned in the State of Andhra Pradesh to themselves in the State of Karnataka. Hence, the facility of transfer of Credit using Form ITC-02 is not available in this case.
FACTS OF THE CASE
The appellant i.e., Deputy Commissioner of Central Tax, Vizianagaram Central GST Division filed an application in Form GST ARA-03 on 25-8-2020 before the Appellate Authority for Advance Ruling, Andhra Pradesh seeking clarification in case of M/s. Shilpa Medicare Limited, Modavalasa Village, Denkada Mandal, Vizianagaram
M/s. Shilpa Medicare Limited undertakes Research & Development work in Active Pharmaceutical Ingredient (API) & formulation molecules & manufacture of formulation products in small quantity for R & D purpose
It was mentioned that the whole business of M/s. Shilpa Medicare Limited unit, Vizianagaram, Andhra Pradesh 531162 vide GST No. 37AADCS8788F1ZR, is being shifted to M/s. Shilpa Medicare Limited, Bengaluru, Karnataka – 562117, vide GST No. 29AADCS8788F1ZO, as a going concern.
M/s. Shilpa Medicare Limited unit, Vizianagaram, stated that the GST returns for the month of Jan-19 were filed with input Credit balance as below, as on 29-7-2019; Input IGST-2,29,24,118.00, Input CGST-50,50,789.00 and Input SGST-35,40,668.00
Questions raised by the M/s. Shilpa Medicare Limited unit, before the Authority for Advance Ruling are:
1.Whether the transaction would amount to supply of goods or supply of services or supply of Goods & Services?
2.Whether the transaction would cover Sl.No.2 of the Notification No. 12/2017 – Central Tax (Rate) dated 28-6-2017?
Can they file GST ITC-02 return and transfer unutilised ITC from Vizianagaram, Andhra Pradesh unit to Bengaluru, Karnataka Unit?
1.The Authority for Advance Ruling clarified that,
2.The transaction would amount to supply of services.
3.The transaction would cover Sl.No.2 of the Notification No. 12/2017 -Central Tax (Rate) dated 28-6-2017.
Ruled in affirmative that GST ITC-02 return can be filed.
Being aggrieved by the ruling of AAR, the appellant approached the appellate authority
COURT HELD
Considering the facts as recorded, held that there is no change in the constitution of the entity as required under section 18(3) of the CGST Act and therefore the provisions for transfer of ITC under section 18(3) would not be permissible in this case.
Credit (ITC) accumulated under a particular State GST Act cannot be utilized in another State as there is no such provision under the extant law. Therefore, due to the exclusivity of ITC earned in a State, M/s. Shilpa Medicare Limited, Vizianagaram are not entitled to transfer the ITC earned in the State of Andhra Pradesh to themselves in the State of Karnataka. Hence, the facility of transfer of Credit using Form ITC-02 is not available in this case.
ANALYSIS OF THE CASE
In the instant case, there is no evidence of “change in the constitution of the registered person”. A change in the constitution would envisage a change from say a proprietorship entity to a Partnership or a Company, or from a Partnership to a Company; or change in the constitution of the Shareholders, etc. There is no such thing happening in this case. M/s. Shilpa Medicare Limited, Vizianagaram is one and the same entity as M/s. Shilpa Medicare Limited, Bangalore, Karnataka. There is no change in the constitution of the entity as required under section 18(3) of the CGST Act and therefore the provisions for transfer of ITC under section 18(3) would not be permissible in this case.
Further, the GST law comprising of the Central GST Act, the Integrated GST Act and State/UT GST Acts, does not envisage the transfer of ITC in the form of CGST and SGST/UTGST accumulated in one State to another State. The scope of the AP GST Act cannot extend beyond the territory of the State of Andhra Pradesh. Similarly, the KSGST Act cannot extend beyond the borders of the State of Karnataka. Credit (ITC) accumulated under a particular State GST Act cannot be utilized in another State as there is no such provision under the extant law. Therefore, due to the exclusivity of ITC earned in a State, M/s. Shilpa Medicare Limited, Vizianagaram are not entitled to transfer the ITC earned in the State of Andhra Pradesh to themselves in the State of Karnataka. Hence, the facility of transfer of Credit using Form ITC-02 is not available in this case
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