Value of ‘Duty Credit Scrips’ will not Form Part of Value of Exempt Supplies for Reversal of ITC: AAR
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- Last Updated on 14 July, 2023
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Case Details: Authority for Advance Rulings, Telangana Kaveri Exports, In re - [2023] 152 taxmann.com 273 (AAR-TELANGANA)
Judiciary and Counsel Details
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- S.V. Kasi Visweswara Rao & Sahil Inamdar IRS, Member
Facts of the Case
The applicant was engaged in supply of Indian Origin raw cotton bales. It received ‘Duty credit scrips’ under scheme for remission of duties and taxes on exported products from the Department of Foreign Trade. It filed application for advance ruling to determine whether sale of ‘Duty credit e-Scrips’ would form part of Turnover for applying Rule 42 and Rule 89(4) of the CGST Rules, 2017.
AAR Held
The Authority for Advance Ruling observed that e-scrips are exempted from GST vide Notification No. 02/2017 dated 28.06.2017. However, after insertion of clause (d) in Explanation-1 to Rule 43, the value of ‘Duty credit scrips ‘ will not form part of value of exempt supplies for purpose of computation of reversal of input tax credit under Rule 42.
Therefore, sale of duty credit scrips would not make applicant liable to reverse input tax credit under Rule 42. However, as per Rule 89(4), the exempted supplies other than zero-rated supplies have to be reduced from the turnover for computing the ‘Adjusted Total Turnover’ and thus, the turnover pertaining to sale of ‘Duty credit scrips’ should be reduced as per Rule 89(4) of CGST Rules, 2017.
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