ITC on clearing agents bills for high seas sales eligibility

[Madhavan iyengar]

Where goods are purchased and sold on highseas basis ( which is treated as no supply post 01/02/2019) is the GST credit of clearing agent charges, eligible to be taken

[KASTURI SETHI]

In my view, ITC is eligible . Clear Agent 's Service is independent of 'No Supply' activity.

[Mahadev R]

I concur with Kasturi Sir.

After the amendment now, for the purpose of Section 17 which restricts ITC on exempt supply, the expression ''value of exempt supply'' shall not include the value of activities or transactions specified in Schedule III, except those specified in paragraph 5 of the said Schedule.

 

[Madhavan iyengar]

But the high seas sales is to be shown as no supply under Non-GST supplies, thus it is not an exempt supply at all. Being a non gst supply can credit be availed of service exclusively used for non-gst supplies. kindly clarify

[Mahadev R]

ITC is restricted in Section 17. When there are exempt+ taxable supplies involved, Rule 42 applied which requires identification of inputs/input services used exclusively for exempt supplies as well. However, according to new explanation, Schedule III items not to be considered as exempt supplies. Therefore, reversal may not arise according to me. Experts can correct my understanding

AI Summary

Input tax credit on clearing agent services likely claimable despite high seas no supply treatment, subject to apportionment.
Whether Input Tax Credit on clearing agent charges is claimable when goods are sold on a high seas (no supply/non GST) basis turns on whether those services are treated as independent taxable services and whether they fall within the exclusion of specified Schedule activities from the definition of exempt supplies; if not exclusively used for non GST transactions and not recharacterised as exempt, ITC is likely available subject to identification and apportionment rules for mixed uses.