TaxTMI 
TaxTMI 
I have purchased ascertained goods from the supplier after making consideration and due to shortage of space in godown of the recipient, the supplier retains the goods as bailee. The supplier filed its return and shown supply of the goods in his GSTR-1 and 3B. Whether the recipient is eligible for ITC without receipt of goods (where goods are held by supplier as bailee) in terms of section 16(2)(b)(i) of CGST Act?
Whether ITC is available when goods are held by supplier as bailee
18 Feb 2020 
3 Replies 
1967 Views Asked by
Input Tax Credit eligibility when supplier holds goods as bailee depends on ownership, delivery-on-direction, and custody characterization.
Issue whether Input Tax Credit is available when the supplier retains goods as bailee: one view permits ITC because ownership and payment liability rest with the recipient and custodial retention by the supplier is covered by the delivery-on-direction wording; the contrary view rejects ITC on the basis that supplier custody does not constitute delivery to the recipient or to any other person on the recipient's direction. The statutory recipient definition and the distinction between transfer of title and physical possession are central to characterization and compliance. (AI Summary)
Issue whether Input Tax Credit is available when the supplier retains goods as bailee: one view permits ITC because ownership and payment liability rest with the recipient and custodial retention by the supplier is covered by the delivery-on-direction wording; the contrary view rejects ITC on the basis that supplier custody does not constitute delivery to the recipient or to any other person on the recipient's direction. The statutory recipient definition and the distinction between transfer of title and physical possession are central to characterization and compliance. (AI Summary)