QUESTION

ABC is deferring the claim of IGST on imports to subsequent month for the goods not received to their premises till the month end but IGST paid after shipment clears from Customs for the month end shipments.

ANSWER

Facts of the case:

Goods are imported and custom duties along with IGST are paid on import. However the goods are received in the factory premises in the subsequent month.

Law Applicable:

Sub section (2) of section 16 CGST lays down the conditions for claiming of ITC as follows;

"(2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless,'

a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed;

(aa) the details of the invoice or debit note referred to in clause (a) has been furnished by the supplier in the statement of outward supplies and such details have been communicated to the recipient of such invoice or debit note in the manner specified under section 37;

b) he has received the goods or services or both.

Explanation.'For the purposes of this clause, it shall be deemed that the registered person has received the goods or, as the case may be, services'

(i) where the goods are delivered by the supplier to a recipient or any other person on the direction of such registered person, whether acting as an agent or
otherwise, before or during movement of goods, either by way of transfer of documents of title to goods or otherwise;

(ii) where the services are provided by the supplier to any person on the direction of and on account of such registered person.

c) 'subject to the provisions of section 41,the tax charged in respect of such supply has been actually paid to the Government, either in cash or through utilisation of input tax credit admissible in respect of the said supply; and

d) he has furnished the return under section 39"

Interpretation:

As evident by the conditions dictated by section 16 CGST, it is imperative that to claim the ITC of input tax paid on goods, the tax must have been paid to the government (Clause c) and that the goods must have been received in the premises of the recipient (clause b), both these conditions should be fulfilled.

Conclusion:

Therefore, ITC of IGST paid on import of goods can be availed when both the conditions, that is payment of tax to the government and receipt of goods in the factory premises, are fulfilled. (Reply dt. 03/02/2022)