Input tax credit remains available when supply consideration is settled by book adjustment under GST.

Input tax credit under GST is not denied merely because consideration for inward supplies is settled by book adjustment or set-off of book debt. Section 49 governs payment to the Government, not the private mode of settlement between supplier and recipient. The term "consideration" in section 2(31) is broad enough to include discharge of liability otherwise than in cash, including reduction of book debt. In the absence of any express GST restriction, credit remains admissible if the other statutory conditions for input tax credit are satisfied.

---

---

Issues: Whether input tax credit is admissible when the recipient pays the consideration for inward supplies by way of book adjustment or set-off of book debt.

Analysis: The ruling examined the scheme of input tax credit under section 16 and the payment mechanism under section 49 of the GST law. It held that section 49 regulates payment to the Government and does not govern the mode of settlement between supplier and recipient. The definition of consideration under section 2(31) was read broadly to include payment in money or otherwise, including discharge of liability by reduction of book debt. The absence of any express restriction in the GST law, unlike the earlier VAT rule relied upon, meant that credit could not be denied merely because the supply consideration was settled through book adjustment, provided the other statutory conditions were satisfied.

Conclusion: Input tax credit is admissible where consideration for inward supplies is settled by book adjustment, and such mode of payment does not by itself disentitle the recipient from credit under the GST law.

---