GST ITC Utilisation

[Ethirajan Parthasarathy]

Section 49(5) which is in force from 1-7-2017 provides for utilization of IGST ITC, in full for set off against output tax and then towards CGST and SGST in that order.

Section 49B which came into force with effect from 1-2-2019 empowers the government to prescribe order and manner of utilization of ITC

Rule 88A which is effective from 29-3-2019 provides for set off of ITC in “Any manner” subject to condition that IGST ITC must be first fully utilized .

It is settled law that Rules cannot be override the Act.

I request expert’s opinion on above issue.

[Shilpi Jain]

Agreed that rules cannot override the Act. Who is going to challenge this rule though? It is a beneficial rule.

[Amit Agrawal]

Dear Shri Ethirajan Parthasarathy Ji,

Can you please explain how Rule 88A is overriding Section 49B?

Dear Ms. Shilpi Jain Mam,

Can you please explain how Rule 88A allows 'additional benefits' to a tax-payer, as compared to relevant provisions of the Act?

In other words, just hypothetically speaking, what can be grievances from Tax Dept's side to claim that this rule 88A overrides relevant provisions and more importantly, how a tax-paper is actually getting those additional benefits which are NOT envisioned in law?

I am just trying to understand various facets involved to the issue raised.

Thanks

[Shilpi Jain]

If IGST credit has to be first used towards CGST and only then SGST liability in some cases there would arise a situation of accumulation of CGST credit.

In such a scenario if assessee has C+SGST outward liability, he may have to pay vide cash ledger in spite of excess credit lying in CGST credit ledger.

[Shilpi Jain]

Pls have a look at the article in the below link

https://www.taxtmi.com/article/detailed?id=9456

[Amit Agrawal]

My views - on the subject query referred here - is as under:

Rule 88A does not exceed the provisions of Section 49B. Hence, any challenge to such rule even by Dept. (hypothetically speaking) - on the ground that such rule override the Act - will fail.

Even though Rule 88A is a beneficial provision to a tax-payer, it is perfectly allowed as per provision of the Act in my view. And tax-paper is not getting any additional benefits which are not envisioned in law

I have gone through the referred article, Ms. Shilpi Jain Mam. And I find nothing contrary to above proposition in said article. Please correct me if I misunderstood anything.

These are ex facie views of mine and the same should not be construed as professional advice / suggestion.

AI Summary

Debate on Rule 88A's impact on Input Tax Credit under GST: Does it conflict with Section 49B or benefit taxpayers? A discussion on a forum revolves around the utilization of Input Tax Credit (ITC) under the Goods and Services Tax (GST) framework. The original query raises concerns about Rule 88A potentially overriding Section 49B of the GST Act. Participants debate whether Rule 88A, which mandates the full utilization of IGST credit before CGST and SGST, conflicts with the Act. One participant argues that Rule 88A does not exceed the provisions of Section 49B and is beneficial to taxpayers. Another participant highlights potential issues with CGST credit accumulation. The consensus suggests Rule 88A aligns with the Act, offering no unauthorized benefits.