Input tax credit is admissible even if consideration is paid through book adjustment

In re Senco Gold Ltd (GST AAR West Bangal)

The Applicant intends to settle the mutual debts through book adjustments. He seeks an advance ruling on  whether the input tax credit is admissible when he settles through book adjustment the debt created on inward supplies from the Franchisee.

AAR held that The Applicant can pay the consideration for inward supplies by way of setting off book debt. The GST Act and rules made there under does not restrict the recipient from claiming the input tax credit when consideration is paid through book adjustment, subject to the conditions and restrictions as may be prescribed and in the manner specified in Sections 16 and 49 of the GST Act.

FULL TEXT OF ORDER OF AUTHORITY OF ADVANCE RULING, WEST Bangal

1. Admissibility of the Application

Please become a Premium member. If you are already a Premium member, login here to access the full content.