re GST on capital goods

[Madhavan iyengar]

Company A sent certain capital goods free of cost to company B ( both are not related parties) and has issued a invoice charging gst (since it is sent FOC without any consideration) the recipient B has taken credit and the recipient has only paid the gst amount to Company A

Query: whether Company B not required to reverse the ITC

AI Summary

Company B's ITC Claim: Rule 37(1) Proviso Says No Reversal Needed; Opposing View Cites Schedule I Compliance. Company A sent capital goods free of charge to Company B, issuing an invoice with GST. Company B paid only the GST and claimed input tax credit (ITC). The query is whether Company B needs to reverse the ITC. One response states that Company B does not need to reverse the ITC as per proviso to rule 37(1), deeming the payment made. Another response argues that since the transaction is not between related parties, Schedule I of the CGST Act does not apply, and Company B must reverse the ITC if it fails to pay the supply value within 180 days.