Input Tax Credit when buyer is outside India

[Kaustubh Karandikar]

XYZ is supplying goods where Bill To party is “PQR(U.K.)” which is outside India but Ship To Party is “ABC, Maharashtra which is in India. Can ABC take credit against the invoice issued by XYZ since PQR as a buyer cannot issue GST invoice in the name of ABC being outside India?

[KASTURI SETHI]

Dear Sir, There is no such provision in GST law. Practically, goods are supplied, consumed and enjoyed in India and a person who uses the said goods in the course of business or furtherance of business should be allowed to avail ITC, if other conditions are fulfilled. In pre-GST era, there was a Board's circular as well as Notification which allowed endorsement on the backside of invoice/bill of entry to the user of Cenvatable goods in or in relation to the manufacture of final product (dutiable). In SEZ Act, there is such practice. In my view, the issue should be raised before GST Council, if there is no technical hurdle.

[YAGAY andSUN]

In our view ABC can't avail the ITC since it is under shipto category. It would be cost to PQR (U.K.).

AI Summary

Input Tax Credit entitlement where bill to is foreign: ship to's ITC claim depends on domestic use and invoicing rules. Input Tax Credit entitlement where goods are billed to an overseas buyer but shipped to an Indian recipient raises whether the ship to can claim ITC when the buyer outside India cannot issue a GST invoice in the recipient's name. One view notes no explicit GST provision but argues that if goods are consumed and used in India and ITC conditions are satisfied, the Indian user should be allowed ITC, referencing past endorsement practice and recommending referral to the GST Council. An opposing view holds the ship to cannot claim ITC because the invoice is in the foreign buyer's name.