EXAMPLE-107

The assesee is engaged in the manufacturing of Machine according to the specification provided by the customer. After the machine is manufactured customer required testing of machine. For testing of machine assesee used some input goods and input service and availed credit of input tax. Whether the assesee is eligible for input tax credit on input or input services used for testing of machine as machine is already manufactured.

Answer.

  Section 16(1) provides for credit of all input, capital goods, and Input Services when used or intended to be used in the course or furtherance of business.

  Under erstwhile Central excise law inputs and capital goods were required to be used in factory and input service was not required to be used in factory but it was required to be used for output services.

Under GST regime, use of inputs or input services in the factory/output supply is not necessary. The only condition which is necessary is that such supply should be used or intended to be used in the course or furtherance of business.

 In view of above provisions, assesee is eligible for credit on input or input services used for testing of machine as the same aee used for the purpose of business. So all previous judgments under excise and service tax on this topic have become irrelevant relating the above referred activity. transaction.