Manimekhala Industries Ltd. is company based in Kochi, manufacturing rubber and allied products. It has a flourishing business with an increasing growth trajectory and is covered under the ambit of CSR requirements as pe

As per Section 17(5) (fa) of the CGST Act, 2017 Input Tax Credit is blocked for goods or services received by a taxable person which is used or intended to be used for activities relating to his obligations under Corporate Social Responsibility referred to Section 135 of the Companies Act 2013. This amendment is effective 1st October 2023. The position is clear that from 1st October 2023 no ITC can be claimed for CSR expenses. The question now remains whether for a prior period ITC can be claimed. There are both favorable and adverse judgements on the same. In the case of Essel Propack Ltd. Vs Commissioner of CGST, Bhiwandi (CESTAT Mumbai) dated August 31, 2018 , CESTAT observed that CSR is not in the nature of charity as it has got a direct bearing on the manufacturing activity of the company which is largely dependent on smooth supply of raw materials. The Tribunal thus held that such expenses are incurred to win the confidence of the stakeholders and shareholders. It also noted that CSR which was a mandatory requirement for the public sector undertakings, has been made obligatory also for the private sector and unless the same is to be treated as input service in respect of activities relating to business, production, and sustainability of the company itself would be at stake. Hence, Cenvat credit was allowed to the appellant. However, in another judgement in Polycab Wires Pvt Ltd , it was held that the applicant is not entitled to Input Tax Credit in respect of CSR expenses. Hence for the period prior to 1st October 2023, Input Tax Credit has been allowed and denied in respect of CSR expenses. Legal opinion is not fully crystallised for the earlier period. Manimekhala Industries Ltd can therefore approach Appellate Authorities should the GST officer reject their Input Tax Credit claim provided the transactions relate prior to 1st October 2023.