Intertek India Pvt. Ltd. Vs Assistant Commissioner of Central Taxes And Central Excise (Kerala High Court)
Prior to April, 2025, when ISD Registration Not Mandatory under GST – Kerala HC Upholds Branch-Office ITC Claim on Invoice Issued in the Name of Corporate Office
The Kerala High Court held that prior to April 1, 2025, obtaining Input Service Distributor (ISD) registration was not mandatory for distributing common input tax credit (ITC) among distinct persons under the GST regime. The Court quashed the demand of ₹1.31 crore and equivalent penalty imposed under Section 74 of the CGST Act against the taxpayer for availing ITC and cross-charging the same to its branches. It ruled that a self-invoice issued under Section 31(3)(f) for services received from an unregistered foreign supplier and taxed under the reverse charge mechanism constituted a valid tax-paying document for claiming ITC. The Court further held that the unamended Section 20 of the CGST Act, 2017 merely enabled distribution of ITC through the ISD mechanism and did not mandate it. Since the transaction was revenue-neutral and involved no tax evasion, a liberal interpretation favouring bona fide taxpayers was warranted.
Facts:
M/s Intertek India Pvt. Ltd. (“the Petitioner“) is a multinational company having its registered office in Kerala, with separately registered units in Delhi, Haryana, Karnataka, Maharashtra and Tamil Nadu under the CGST Act, 2017.
