ITC admissible on Sale & Buyback Transactions via Book Adjustments: GST AAR West Bengal

In re Paragon Polymer Products Pvt Ltd (GST AAR West Bengal)

Introduction: The GST AAR West Bengal recently addressed a crucial query from Paragon Polymer Products Pvt Ltd regarding the admissibility of input tax credit (ITC) in sale and buyback transactions. This article provides an in-depth analysis of the ruling, focusing on the key aspects and implications for businesses engaged in similar models.

Background:

• Applicant’s Business Model: Paragon Polymer Products Pvt Ltd, a footwear trader in West Bengal, proposed a sale and buyback model. In this arrangement, raw materials for footwear production would be sold to outsourced vendors, with a subsequent buyback of manufactured goods. Payment settlement was planned through book adjustments against mutual debts.

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