INPUT Credit

[Arjun Gopalakrishna]

INPUT CREDIT OF GST COLLECTED BY GOVERNMENT BODY ON FINES AND PENALTIES LEVIES FOR DELAY IN SUBMISSION OF FORMS.

IS THERE ANY RESTRICTION FOR CLAIMING GST INPUT IN THIS CASE

[KASTURI SETHI]

In my view ITC on penalty paid due to late submission of forms is not allowed. In my view such penalty is legal requirement and does not qualify to the criteria of "in the business or furtherance of business."

[Arjun Gopalakrishna]

Sir we appreciate you view on this query. SEBI has levied penalty for delay in submission of quarterly forms. There is no restriction of INPUT credit under section 16, 17 ans 18 of the act. and further "INPUT service" definition states ''in the course or furtherance of business''. The company has to pay the penalty to further run the business with out any difficulties from the authorities. will this point stand when scrutiny comes. Please clarify This issue.

Further, if it is not allowed under which provision of the act.

[Alkesh Jani]

Sir, In the instant case, I support the views of Sh. Kasturiji Sir, The penalty for late submission of form is not forming part of any supply. Moreover, if you are able to prove it as a supply, then the value of supply against consideration is required, the Section 15(2) (d) of CGST Act, 2017, interest, or late fees or penalty for delayed payment of any consideration for supply, is mentioned. Only payment of penalty cannot constitute supply.

Merely, non-mentioning in Section 16, 17 and 18 of Act, does not gives you liberty of all Taxes as credit, other factors are required to be considered before arriving at any conclusion.

Our experts may correct me if mistaken.

Thanks

[DR.MARIAPPAN GOVINDARAJAN]

I endorse the views of Shri Arjun.

[KASTURI SETHI]

If penalty is imposed upon an assessee for an offence (committed by assessee )by way of Adjudication Order, no ITC on that amount of penalty is admissible. In other words, such penalty is not to be treated in business or furtherance of business. The same analogy can be applied here.

[Alkesh Jani]

Sir, Please allow me to raise a query in the matter.

1. Whether penalty imposed by SEBI, is against any supply and was any consideration made to SEBI.

2. Whether this penalty imposed falls under goods or services. Can you please classify? With HSN Code.

3. Whether Invoice raised by SEBI is in terms of Section 9(1)CGST Act, 2017, and return has been filed by SEBI? (conditions for availing ITC in terms of Section16 of the said Act.)

If we have reply to above, ITC can be taken.

Thanks

[YAGAY andSUN]

We endorse the views of Kasturi Sir as paying penalties for mistakes cannot be treated at par with Input Services.

[subramanian vijayakumar]

I go with expert kasthuri ji views

AI Summary

Input tax credit on penalties is barred where the payment is not a supply; test supply characterisation and invoice compliance. Input tax credit on penalties or late fees paid to a regulatory body is generally unavailable where the payment does not constitute a supply in the course or furtherance of business; adjudicated penalties as sanctions are treated as non-creditable. Entitlement depends on factual and documentary elements: whether the payment can be characterised as consideration for a supply, whether an invoice reflecting a taxable supply exists, and whether statutory conditions for claiming credit (tax charged and return compliance) are met.