Input tax credit

[Ashwin Bhalakiya]

Dear Sir

My friend company having Two GST Number, one branch in west Bengal and another in state of Tamilnadu. Raw material is procured at Tamilnadu, which in turn transfer the goods to West Bengal branch for manufacturing , now they stopped purchasing from Tamilnadu and procuring goods from 3rd party from this year , but there is unutilized input is pending in Tamilnadu of previous year, to transfer the unutilized ITC to West Bengal they plan to give one rate difference Debit note to West Bengal Branch dated 31st march.

My friend Question is

1 whether issuing debit note for rate difference is correct as per the GST law.

2 At what valuation/Profit they can transfer goods from Tamilnadu to West Bengal. Because during the year Tamilnadu has supplied goods at cost.

3 The ITC has remained pending because certain party/Govt not filed their Return on time.

4 Please suggest what documentation is required for raising debit note.

AI Summary

Company Seeks Advice on Transferring Unutilized ITC Between States; Debit Note Use Discouraged Due to Penalties A company with GST numbers in Tamil Nadu and West Bengal seeks advice on transferring unutilized input tax credit (ITC) from Tamil Nadu to West Bengal. They consider issuing a debit note for rate differences. Responses suggest various options, including utilizing the ITC for other supplies, purchasing materials under a 'bill to ship to' model, and caution against using debit notes for ITC transfer due to potential penalties. The discussion highlights concerns about compliance with GST laws, emphasizing that transferring ITC through debit notes may attract interest and penalties from tax authorities.