A Fundamental GST Doubt, Finally Settled
One of the most common—and confusing—questions under GST has finally found clarity:
Can a business use Input Tax Credit (ITC) earned from one kind of supply to pay tax on another, unrelated supply?
This doubt, especially relevant for businesses handling multiple verticals under a single GST registration, was recently addressed head-on in the Aristo Bullion Pvt. Ltd. case.
The Issue at Hand
Aristo Bullion operated a bullion business but later diversified into trading castor oil seeds. While the gold business attracted GST, the inward supply of castor seeds (purchased from agriculturists) was exempt—though their sale attracted output GST.
Aristo wanted to use ITC from its bullion purchases to discharge GST liability on castor oil seed sales. The initial ruling by GAAR (Gujarat AAR) said No, citing no direct link between the two supplies.
The Ruling That Changed Everything
The Gujarat Appellate Authority for Advance Ruling (AAAR) overturned that position—and brought welcome clarity.
Their verdict:
- ✅ Section 16(1) of the CGST Act allows ITC for anything used in the course or furtherance of business—not just linked to a specific output.
- ✅ Once ITC is availed, it enters a common electronic credit ledger—a single pool that can be used to pay any output tax.
- ✅ No item-wise nexus is required. GST isn’t about product mapping—it’s about business activity.
What This Means for You
This ruling unlocks flexibility for startups, conglomerates, retailers, and every business that sells more than one product:
- You don’t need separate ITC accounts for each business line.
- As long as ITC is validly claimed and used for business purposes, you’re good to go.
This aligns with GST’s core principle: a seamless, destination-based value-added tax.
Final Word
The Aristo Bullion ruling isn’t just a technical win—it’s a dose of practical common sense. It simplifies compliance, removes ambiguity, and restores GST’s original intent: ease of doing business. Get in touch with Pitchers Global today!