Compliance of Same-Month ISD Credit Distribution Procedure Ultra vires: Telangana HC

BirlaNu Ltd. Vs Union of India and 3 others. (Telangana High Court) The Telangana High Court held that Rule 39(1)(a) of the CGST Rules, 2017, insofar as it mandates distribution of Input Tax Credit (ITC) by an Input Service Distributor (ISD) within the same month, is ultra vires Section 20 of the CGST Act, 2017, and accordingly struck it down, along with quashing the consequential Final Audit Report and show-cause notice proposing a penalty of ₹8.38 crore. The petitioner, a registered ISD, had accumulated ITC during FY 2017–18 and 2018–19 and distributed the entire accumulated credit in ...