Eligibility as ITC

[Bharat Cholleti]

Dear sir,

We got a supply of goods contract from APCPDCL (Electricity board), which supply got delayed, penalty imposed by the APCPDCL on that IGST was collected, Is supplier will be entitle to take ITC of IGST paid on penalty. please advise. Thanks in advance.

AI Summary

Input tax credit eligibility for IGST paid on penalty may arise when tax is assessed and paid by the recipient.
Whether a supplier may claim Input Tax Credit of IGST paid on a penalty imposed by a contracting authority is contested: the transaction has been identified as a service under Schedule II but 'penalty' is not expressly mentioned, creating potential dispute. If tax is assessed and paid by the recipient authority, the supplier may be able to claim credit of the tax so paid; alternatively the supplier could seek repayment from the authority in light of GST circular clarification.