2026-VIL-173-AAR
  1. Home
  2. 2026-VIL-173-AAR

SGST Advance Ruling Authority

GST - Input Tax Credit on expenses incurred for Initial Public Offering (fresh issue) under Section 16 of CGST Act, 2017, Scope of expression “furtherance of business” - Applicant, a public limited company, offered shares to the public through a combined ‘offer of fresh issue’ and ‘offer for sale’ by existing shareholders, with the net proceeds to be utilised for capital expenditure - Whether Input Tax Credit on expenses incurred in the course of Initial Public Offering (fresh issue) is eligible under Section 16 of the Act - HELD - The expenses incurred relatable to “offer for sale” by the existing shareholders cannot be deemed to be part of the business of the company. Therefore, though it may be facilitated by the company, the GST levied on such expenses by the suppliers of service is not eligible for ITC claim by the company - Section 16(1) uses the wider expression "in the course or furtherance of business", and furtherance of business means an activity undertaken with the object or effect of promoting, advancing, facilitating or supporting the business, which is broader than the core business activity. The IPO services such as merchant banker fees, legal consultancy, registrar fees, underwriting commission, advertising and listing fees facilitate the company's access to capital, which in turn facilitates its business activities, and there is an indirect but substantial nexus with furtherance of business - IPO expenses are not among the categories of blocked credit under Section 17(5). Section 16(1) is the principal enabling provision, and Section 17(5) creates specific exceptions to it - The ITC on expenses incurred on the Initial Public Offering (fresh issue) is eligible when the net proceeds are utilised for furtherance of business, and ITC on the portion of expenses relating to the offer for sale by existing shareholders, the proceeds of which do not accrue to the company, is not eligible - Ordered accordingly
Download File

Quick Search

/

Advance Search

GST Resources

/

Gst Rate Finder

Weekly Summary

VIL Video

GST & Customs updates: Sep'26
By CA Vivek Jalan

Create Account

Security-Code
New Code?

Log In

New User ? Forgot Password ?

Forgot Password

Security-Code
New Code?
Please Note: This facility is only for Subscribing Members.

Email this page

Security-Code
New Code?

Feedback this page

Schedule a Demo

Schedule a demo to know the features and advantages of VILGST portal. Get to know the tips to find the desired results in faster way.

Security-Code
New Code?

Caselaw Request Form (CRF)

Didn’t find what you are searching for? No worries, please give us the following details and VIL will email you the desired Caselaws at the earliest:

Security-Code
New Code?