In re Tvl. MRF Limited (GST AAR Tamilnadu)
This case involves MRF Limited, a company with manufacturing units and a Head Office (HO) across multiple states in India, seeking an advance ruling from the Tamil Nadu Authority for Advance Ruling (AAR). The core issue revolves around the distribution of Input Tax Credit (ITC) for common input services used by its various branches and factories.
Factual Background
MRF Limited has a Head Office in Chennai and manufacturing units in several states, including Tamil Nadu, Telangana, Kerala, Goa, and Gujarat. It holds both a regular GST registration for its Tamil Nadu operations and a separate Input Service Distributor (ISD) registration for its HO. The HO receives various common input services, such as advertising, auditing, and maintenance, which are used by its different business units (BOs) or branches.
Prior to the recent amendments, MRF’s practice was to receive invoices for these common services in the name of its regular GST registration (which listed the HO as an additional place of business). It would then distribute the ITC to the respective BOs by issuing tax invoices under Section 31 of the CGST Act, a practice often referred to as a cross-charge mechanism. This method was supported by a clarification from the Central Board of Indirect Taxes and Customs (CBIC) via Circular No. 199/11/2023-GST dated July 17, 2023. This circular explicitly stated that while the ISD mechanism was an option, it was not mandatory, and companies could use the cross-charge method to distribute ITC.
