Input Tax Credit against Stock Transfer from factory to godown

[Kaustubh Karandikar]

XYZ having manufacturing unit at Gujarat and godown in Maharashtra. When the goods are stock transferred from Gujarat to Maharashtra, GST is paid on it being distinct person concept under GST provisions and Maharashtra is taking credit of the GST charged by Gujarat. However, since both are same entity, there is no payment made by Maharashtra to Gujarat. Can the GST authorities deny the credit to Maharashtra since one of the conditions is payment to be made to the supplier within 6 months?

[SHARAD ANADA]

Refer Rule 37. Reversal of input tax credit in the case of non-payment of consideration.-(1) Provided that the value of supplies made without consideration as specified in Schedule I of the said Act shall be deemed to have been paid for the purposes of the second proviso to sub-section (2) of section 16:

[YAGAY andSUN]

Through Book adjustment it would be deemed to have paid.

[Mahadev R]

Agree with Sharad

[Ganeshan Kalyani]

It is deemed that payment is made as per GST provision.

AI Summary

Input tax credit: book adjustments can satisfy the payment condition for intra entity stock transfers, enabling credit claims. Stock transfers between units of the same entity are treated as supplies between distinct persons for GST, enabling ITC to the receiving unit where tax was charged. A payment condition exists for retention of ITC and failure to pay may require reversal. However, internal book adjustments are treated as deemed payment under the rules, and such deemed payment can satisfy the payment requirement, avoiding reversal of ITC for intra entity transfers.