Cross-Charge Valid for Common ITC Distribution Before April 1, 2025: Karnataka HC

Micro Labs Limited Vs Joint Commissioner of Central GST & Ors. (Karnataka High Court) The Karnataka High Court held that distribution of Input Tax Credit (ITC) through cross-charging is valid and that using the Input Service Distributor (ISD) mechanism is not mandatory for common input services. The petitioner, a pharmaceutical company, distributed ITC to its branch units using both ISD and cross-charge methods, particularly for services taxed under reverse charge where ISD was not feasible under the pre-amended law. The tax authorities denied such distribution and raised demands, alleging...