ITC ON TAX PAID THROUGH RCM ON NON GST GOODS

[Renju Joy]

Is credit available on freight paid on Reverse Charge basis on transportation of petroleum product?

[Rajagopalan Ranganathan]

Sir,

GST is leviable on transportation charges payable for transporting the petroleum products but ITC of the same is not available since the supply of petroleum products is non-gst supply.

[Ganeshan Kalyani]

Sir, for taking credit the outward supplies should be taxable. In your case it is non-GST goods supply and hence credit is not allowed.

[JAIPRAKASH RUIA]

Some assumptions here, if the RCM is paid, the regd person is recipient of non GST goods and not the supplier of non GST goods. if recepient is supplier of taxable goods and petroleum product is used in process of manufacturing the same taxable goods.

Making any difference please ?

[Rajagopalan Ranganathan]

Sir,

If the petroleum products are used in the manufacture of taxable supply, then you can avail the ITC of gst paid under RCM on the freight paid for the transportation of the said petroleum products. Only the credit of excise duty and other duties, if any, paid on the petroleum products cannot be availed.

[KASTURI SETHI]

W.r.t query at serial no.3 above, in this scenario ITC is allowed as there is no one-to-one correlation.

[PAWAN KUMAR]

Dear sir,

ITC is applicable of RCM paid GST as per Section 16 of CGST Act.

[Alkesh Jani]

Sir,

I am of the view that, first of all it is to confirm that what kind of business activity is undertaken and for what purpose this product was received. The query is general in nature therefore, there can be many if and but.

[Ganeshan Kalyani]

I agree with the views of Sri Rajagagoplan Sir and Sri Kasturi Sir. I also support the views of Sri Alkesh Sir.

[VaibhavKumar Jain]

Please may see that petroleum products namely Crude oil, Petrol, Diesel, Aviation Turbine Fuel and Natural gas are outside the GST and other petroleum products such as Kerosene, LPG, Sulphur, Pet-coke etc. are liable to GST.

If the GST paid under RCM exclusive for exempted products as above, then not entitled for ITC whereas if GST paid on taxable goods, 100% ITC can be availed.

If the GST paid under RCM for both types of goods i.e. exempted as well as dutiable goods and not possible to segregate separately, then ITC can be taken considering as common input services at the proportion of dutiable and total turnover for the month concerned as described in Rule 42 of CGST Rules.

Regards.

Gopabandhu Mishra

[PAWAN KUMAR]

Dear Sir,

What if the petroleum products is purchased for use in business activity, for this transportation services are used and RCM applicable. and GST paid on such transportation is eligible as ITC. if business is of non gst goods, then RCM not claimable, refund provision will be there.

AI Summary

Input Tax Credit on reverse charge: ITC allowed only if underlying supply is taxable or used in taxable output.
Availability of Input Tax Credit on GST paid under reverse charge for freight on petroleum products turns on whether the underlying goods are taxable: no ITC where the goods are non GST; ITC permitted where the recipient uses the goods in making taxable supplies; duties other than GST are not creditable; where RCM covers both taxable and exempt goods and cannot be segregated, ITC must be apportioned to taxable turnover under the statutory apportionment mechanism; recipients must otherwise satisfy ITC eligibility and registered business requirements, while businesses solely trading in non GST goods cannot claim such ITC and may seek refunds.