Gujarat AAAR Rejects ITC Claim on Mutual Fund Transactions:

Gujarat AAAR Rejects ITC Claim on Mutual Fund Transactions The current appeal (No. Advance Ruling/SGST&CGST/2025/AR/04), dated 28.04.2025, has been filed by a company named M/s. Zydus Lifesciences Limited under Section 100 of the CGST Act, 2017 and the GGST Act, 2017, before the Gujarat Appellate Authority for Advance Ruling Goods and Services Tax (GST), D/5, Rajya Kar Bhavan, Ashram Road, Ahmedabad -380 009. The appellant is registered under the GST department, has a registered address at Zydus Corporate Park, Scheme No. 63, Survey No. 536, Khoraj (Gandhinagar), Nr. Vaishnadevi Circle, SG Highway, Ahmedabad 382 481, and also possesses GSTIN no. 24AAACC6253G1ZZ.

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The appellant is involved in the manufacturing, supply and distribution of pharmaceutical products. Invests their extra money that is not being used in different mutual fund schemes. They later sell these investments when they need cash. The appellant claims ITC on goods and services they use both for taxable supplies and for investing in and redeeming mutual fund units. Currently, they are reversing part of the ITC according to Section 17(2) of the CGST Act, 2017 and Rule 42(2) of the CGST Rules, treating the investment and redemption activity as an exempt supply. However, the appellant believes they do not need to reverse this ITC and, based on this view, the appellant has sought the present Appellate Authority for Advance Ruling (No. GUJ/GAAAR/APPEAL/2025/18), dated 22/09/2025, against the Advance Ruling No. GUJ/GAAR/R/2025/09, dated 25/03/2025. Questions Asked by Applicant: The applicant, M/s. Zydus Lifesciences Limited has asked the following question seeking the AAAR Gujarat (No. GUJ/GAAAR/APPEAL/2025/18), dated 22/09/2025: "Question: Whether the applicant is eligible to avail ITC of tax paid on common inputs and input services used in relation to the subscription and redemption of mutual funds?" Before filing the present appeal, the appellant presented its case before the Gujarat Authority for Advance Ruling (GAAR) issued its ruling in Advance Ruling No. GUJ/GAAR/R/2025/09, dated 25.3.2025, which stated the following: "The applicant can avail ITC on common inputs and input services used in relation to the subscription and redemption of mutual funds, subject to the condition mentioned in section 17(2) of the CGST Act, 2017. Further, the value of exempt supply in terms of section 17(3), ibid., shall include the value of transactions in securities, in terms of the explanation as reproduced supra."

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Answers Given by AAAR Gujarat: The Gujarat Appellate Authority for Advance Ruling Goods and Services Tax (GST) has given the following answer to the question raised by the appellant: The present appeal filed by M/s. Zydus Lifesciences Limited (appellant) under Section 100 of the CGST Act, 2017 and the GGST Act, 2017, has been rejected by the Gujarat Appellate Authority for Advance Ruling against the Advance Ruling No. GUJ/GAAR/R/2025/09, dated 25/03/2025 of the Gujarat Authority for Advance Ruling.