Case Details: In re: Aadinath Agro Industries (2025) 31 Centax 365 (A.A.R. - GST - Raj.)
Judiciary and Counsel Details
- Shri Utkarsh & Dr. Akhedan Charan, Members
- Shri Mukesh Chordiya, C.A. for the Applicant.
Facts of the Case
The applicant, a partnership firm, sought a ruling under Rule 86B of the CGST Rules and the Rajasthan GST Rules on whether cumulative income tax paid by the firm and its partners together could be considered for exemption from the restriction on utilization of input tax credit from the Electronic Credit Ledger. The applicant’s monthly taxable turnover exceeded ₹50 lakh, triggering the applicability of Rule 86B, which limits discharge of output tax liability to 99 percent through electronic credit. The applicant submitted that although neither the firm nor any individual partner had paid income tax exceeding ₹1 lakh in each of the preceding two financial years, the firm and its partners had together paid an amount well above that threshold. It was contended that the cumulative tax contribution should suffice for exemption from the restriction. The matter was accordingly placed before the AAR Rajasthan.
AAR Held
The AAR Rajasthan held that the exemption under Rule 86B of the CGST Rules and the Rajasthan GST Rules could not be granted unless the firm or any of its individual partners had independently paid income tax exceeding ₹1 lakh in each of the two preceding financial years. It was specifically noted that the provision does not contemplate or permit aggregation of income tax paid by the firm and its partners to meet the threshold condition. As neither the applicant firm nor any partner had individually met the prescribed income tax threshold, the restriction under Rule 86B remained fully applicable, allowing utilization of only 99 percent of the electronic credit for tax discharge.
List of Notifications Cited
- Notification No. 94/2020-Central Tax, dated 22nd December 2020
