EXAMPLE-102

M/s AB Ltd (manufacturer) imported goods for further manufacturing of final product.  Manufacturer paid Rs. 30 lakh as price for the goods and BCD @ 10% amounting to Rs. 3 lakh and integrated tax on import of goods shall be levied and collected in accordance with the provisions of section 3 of the Customs Tariff Act, 1975 at the point when duties of customs are levied on the said goods under section 12 of the Customs Act at the rate of 18% of Rs. 5,40,000.

(i)                 Determine the amount that M/s AB Ltd  can claim as input tax credit.

(ii)               Would it make any difference while claiming ITC, when M/s AB Ltd is not manufacturer but service provider.

Answer

(i) The definition of "input tax” under section 2(62) means the central tax, State tax, Integrated tax or Union Territory tax charged on any supply of goods or services or both made to him and includes—

(a) the integrated goods and services tax charged on import of goods;

(b) the tax payable under the provisions of sub-sections (3) and (4) of section 9;

(c) the tax payable under the provisions of sub-section (3) and (4) of section 5 of the Integrated Goods and Services Tax Act;

(d) the tax payable under the provisions of sub-section (3) and sub-section (4) of section 9 of the respective State Goods and Services Tax Act; or

(e) the tax payable under the provisions of sub-section (3) and sub-section (4) of section 7 of the Union Territory Goods and Services Tax Act, but does not include the tax paid under the composition levy; 9;

In view of the above definition, M/s AB Ltd is eligible for credit integrated tax of Rs. 5,40,000 as input tax credit, if such goods and/or services are used, or are intended to be used, in the course or furtherance of his business and also satisfied other condition of Section 16.

(iii)              If ABLtd is a service provider there is not any difference in the eligibility of integrated tax as credit. Service provider can also take credit of Integrated tax.