Question 115: A ABC Pvt. Ltd. is a Licensed Internet Service Provider in South Gujarat.
We have our servers hosted in data center at Mumbai. All our centers gets connected to these server, and we have obtained connectivity from different telecom companies like Airtel, Vodafone, TATA as per our requirements and availability.
We have obtain GST registration at Maharashtra and Gujarat both the state.
As per the license conditions, we cannot sell any services outside our service area i.e. Gujarat not in Maharshtra. All telecom companies issue Invoices for connectivity in 50:50 format (i.e. Gujarat:maharshtra) for all location A-to B connectivity. We have huge GST credits piled up, for Maharashtra Invoices, as we can not sell anything outside of Gujarat.. Please let us know how we can consume that Maharashtra`s credit in Gujarat '

Answer You are raising invoices to customers from Gujarat and input services are procured in Gujarat as well as Maharashtra. The unit of Maharashtra is a distinct person and doing all operations for unit of Gujarat. It is a supply without consideration from Maharashtra to Gujarat and taxable under Schedule I clause 1.

You have following two alternatives:
1. Issue invoice from Maharashtra to Gujarat keeping in mind Valuation rules.
2. Get registered as ISD in Maharashtra and transfer credit to Gujarat.

Alternative 1 is more practical because in this you can claim credit of inputs, input services and capital goods and transfer the same by using it for payment of tax on the supplies made to Gujarat.

In alternative 2 you can transfer credit of services only. (reply dt. 05/25/2018)