GST on CSR Activities: Eligibility for ITC and Legal Consequences

Fact and issue of the case

At the outset we would like to make it clear that the provisions of the Central Goods and Services Tax Act, 2017 and Gujarat Goods and Services Tax Act, 2017 (hereinafter referred to as the `CGST Act, 2017′ and the `GGST Act, 2017′) arc in pari materia and have the same provisions in like matter and differ from each other only on a few specific provisions. Therefore, unless a mention is particularly made to such dissimilar provisions, a reference to the CGST Act, 2017 would also mean reference to the corresponding similar provisions in the GGST Act, 2017.

The present appeal has been filed under Section 100 of the CGST Act, 2017 and the GGST Act, 2017 by M/s Adama India Private Limted (hereinafter referred to as Appellant) against the Advance Ruling No. GUPGAAR/R/44/2021 dated 11.08.2021.

Briefly the facts of the case is as under :

M/s Adama India Private Limited, Plot No. D-2/CI I-1, GIDC Estate, Dahej, Tal-Vagra, Dahej, Bharuch-392130 Gujarat (herein after referred to as ‘the appellant’), holding GSTIN: 24AABCM8797N1ZO, are suppliers of insecticides, fungicides and herbicides.

The appellant submitted that as per Section 135 of the Companies Act, 2013, it has been spending the mandatory amount on Corporate Social Responsibility [‘for short — ‘CSR’] activities in the form of donations to the Government relief funds/ educational societies, civil works or installation of plant and machinery items in schools or hospitals, distribution of food kits etc,; that the vendors who supply goods/services to the appellant for the purpose of undertaking the CSR activities charge GST on their output supplies; that the appellant intends to avail the Input Tax Credit (ITC) of the inputs and input services being procured for the purpose of undertaking the CSR activities.

The appellant sought advance ruling on the following questions:

Whether the inputs and input services procured by the appellant, in order to undertake the mandatory CSR activities as required under the Companies Act, 2013, qualify as being in the course and furtherance of business and therefore will be counted as eligible ITC in terms of Section 16 of the Central Goods and Services Act, 2017 (CGST Act)?

Observation of the court

We find that the case laws cited by the appellant in their appeal are of pre-UST era and hence not relevant to the present case. The opinion of the SGST official does not have any legal binding on the advance ruling authority. Further the appellant has relied upon the order dated 20.10.2022 of Telangana AAR in the case of M/s. Bambino Pasta Food Industries Private Limited. We are of the view that as per Section 103 of the CGST Act, any Advance Ruling is binding on the appellant who has sought it and on the concerned officer or the jurisdictional officer in respect of the

In view of the above findings, we reject the appeal filed by appellant M/s Adama India Private Ltd., against Advance Ruling No. GURGAAR/R/44/ 2021 dated08.2021 of the Gujarat Authority for Advance Ruling.