Availment and Utilization of ITC in Wrong Head of Tax—Validity of—CS. Pradeep Vyas

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The Tax Publishers GST--Input Tax Credit Availment and Utilization of ITC in Wrong Head of Tax--Validity of CS. Pradeep Vyas In this article, we will discuss various aspects with regard to Availment and Utilization of ITC in Wrong Head of Tax in view of scheme of GST Statute and Government and Judicial perspective in this regard. 1. Introduction One India, One market and One tax' is the mantra of the GST regime. The structure of GST is of a destination-based consumption tax with Input Tax Credit ('ITC') of the tax paid on goods or services at each stage available in the next stage of value addition for avoiding cascading effects irrespective of the destination, be it an inter-State supply or intra-State supply. The flow of ITC along with the supply chain of registered persons is happening simultaneously in every financial year. In the seamless transfer of ITC from one station to another in the chain of value addition, there is still a divergent view between Taxpayer and Revenue, on the point of Availment and Utilization of ITC in Wrong Head of Tax. In this Article, we will discuss various aspects with regard to Availment and Utilization of ITC in Wrong Head of Tax in view of scheme of GST Statute, circulars and various judicial pronouncements. 2. Scheme of GST statute GST regime has been brought in to provide a uniform tax on the supply of goods and services across the country and to avoid cascading effects on such supply. The ITC is the very basis of the GST regime. The tax structure under the GST is heavily dependent on ITC being available to the recipient dealer. The recipient dealer depends heavily on the credit available to him under the Act for discharging his outward tax liability. First of all, let us go through the scheme of GST statute with regard to collection of tax on supplies, availment of credit of input tax paid on supplies and the movement of credit between Central and State Government, upon utilization of ITC by taxpayers. (i) Supply of Goods and Services Section 7(1)(a) of CGST Act, 2017 defines the expression "supply" to include all forms of supply of goods or services or both such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business. SUBSCRIBE FOR FULL CONTENT

The Tax Publishers

GST--Input Tax Credit

Availment and Utilization of ITC in Wrong Head of Tax--Validity of

CS. Pradeep Vyas

In this article, we will discuss various aspects with regard to Availment and Utilization of ITC in Wrong Head of Tax in view of scheme of GST Statute and Government and Judicial perspective in this regard.

1. Introduction

One India, One market and One tax' is the mantra of the GST regime. The structure of GST is of a destination-based consumption tax with Input Tax Credit ('ITC') of the tax paid on goods or services at each stage available in the next stage of value addition for avoiding cascading effects irrespective of the destination, be it an inter-State supply or intra-State supply. The flow of ITC along with the supply chain of registered persons is happening simultaneously in every financial year. In the seamless transfer of ITC from one station to another in the chain of value addition, there is still a divergent view between Taxpayer and Revenue, on the point of Availment and Utilization of ITC in Wrong Head of Tax. In this Article, we will discuss various aspects with regard to Availment and Utilization of ITC in Wrong Head of Tax in view of scheme of GST Statute, circulars and various judicial pronouncements.

2. Scheme of GST statute

GST regime has been brought in to provide a uniform tax on the supply of goods and services across the country and to avoid cascading effects on such supply. The ITC is the very basis of the GST regime. The tax structure under the GST is heavily dependent on ITC being available to the recipient dealer. The recipient dealer depends heavily on the credit available to him under the Act for discharging his outward tax liability.

First of all, let us go through the scheme of GST statute with regard to collection of tax on supplies, availment of credit of input tax paid on supplies and the movement of credit between Central and State Government, upon utilization of ITC by taxpayers.

(i) Supply of Goods and Services

Section 7(1)(a) of CGST Act, 2017 defines the expression "supply" to include all forms of supply of goods or services or both such as sale, transfer, barter, exchange, license, rental, lease or disposal made or agreed to be made for a consideration by a person in the course or furtherance of business.