Order date – 20 October 2022

 Facts –

• The applicant, Bambino Pasta Food Industries, is a manufacturer of Vermicelli and pasta Products. The applicant has donated oxygen plant to AIIMS hospital Bibinagar, Yadadri Bhongir District, for the benefit of patients who were suffering with low oxygen levels during the covid time.
• The applicant has purchased oxygen plant and spare parts for that oxygen plant which includes IGST paid. The applicant is of the opinion that the expenditure made by them comes under the CSR provisions as per Section 135 of the Companies Act, 2013.

Issue –

• Whether ITC is available on CSR expenditure spent by the applicant?

Order –

• The AAR found that the applicant has purchased an oxygen plant for Rs.62,74,200/- and has given it to AIIMS Hospital has part of their corporate responsibility under section 135 of the companies Act, 2013.
• The sum and substance of the averments made is that these purchases are made in furtherance of their business and hence tax on such purchases is eligible for input tax credit under section 16(1) of the CGST Act.
• The AAR gone through the Section 135 of companies Act, 2013 enshrines corporate social responsibility which clearly state that the Companies with a specified networth or net profit are obliged to incur a minimum of 2 % of their net profit towards their corporate social responsibility and failure to do so will attract penalty under sub section 7 of sec.135 of the said Act which may go upto a maximum of Rs.1 Cr.
• Thus, the running of the business of a company will be substantially impaired if they do not incur the said expenditure. Therefore, the expenditure made towards corporate responsibility under section 135 of the Companies Act, 2013, is an expenditure made in the furtherance of the business. Hence the tax paid on purchases made to meet the obligations under corporate social responsibility will be eligible for input tax credit under CGST and SGST Acts.