Whether a registered person can claim ITC paid on CGST & SGST of other states where he is not registered?
Storm Communications Private Limited (GST AAR West Bengal)
GST (Goods and Services Tax) is a destination-based tax which means that the tax levied shall be collected by the state in which such goods or services have been consumed.
Let’s take an example of Mr. A registered under GST in the state of Maharashtra who took accommodation at a resort in the state of Kerala for attending a business-related seminar.
The resort had issued Mr. A, an invoice by charging CGST and Kerala SGST as the place of supply was treated to be an intra state as per Sec 12(3) of the IGST Act, 2017.
The issue in question was whether Mr. A was eligible to claim the central tax portion ITC (Input tax credit) i.e. CGST to adjust against his output tax liability in the state in which he is registered.
Since GST is a destination-based tax the right to enjoy the tax collected shall be with the state where such tax has been levied. Hence the CGST levied by the resort shall not be eligible to Mr. A, to set it off with his output tax liability.
Similar ruling can be found in the matter Storm Communications Private Limited (GST AAR West Bengal), Order No.: 39/WBAAR/2018-19 dated 28/01/2019. The gist of the said ruling is as follows:
Storm communications was involved in providing services of Event Management Services. It was registered as a GST tax payer in West Bengal, Jharkhand, Odisha,
Maharashtra and Delhi. To cater to the needs of their clients in relation to event management services it had to move out of the state in which such company was not registered. The company incurred miscellaneous expenses in relation to booking of hotels, food, banquet halls etc. Hence, company was charged with CGST & SGST of that state by mentioning the GSTIN of the company.
Storm Communications wanted to know as to whether the CGST component could be availed to set off with outward supplies. However, the West Bengal authority for advance ruling held that it would not be possible to set off the CGST component with outward supplies.
Encl: Copy of Advance Ruling
Published By:-
CA Ramnath M. Shanbhag
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