Tax Invoices to be received by an ISD for distribution

[Vinay Kunte]

Our Client whose Head Office is a registered Taxpayer since Jul-2017 as provider of services, is also liable to pay GST under RCM, Import of Services ,etc. and is also receiving tax Invoices from many service providers who are providing common services to all or some of its manufacturing plants as well as branches and depots. He has been receiving these Invoices under the Registered GSTIN as a taxpayer since Jul-2017. Now realising that the ITC claimed on these supplies is getting accumulated unnecessary blocking the find flow, he has a separate obtained the Registration as an ISD. Now, my query is that does he need to get the Tax Invoices from the suppliers of common services to have the New GSTIN as an ISD or can he distribute the ITC covered under the Invoices received with the old GSTIN for distribution?

Please advice.

[KASTURI SETHI]

In this scenario, a separate registration as ISD is required.

[Ganeshan Kalyani]

Sir, just like GSTR 2A there is GSTR 6A for the Input Service Distributor (ISD). If you obtain new no. for ISD the old invoices will not get populated to new no. Therefore, after obtaining ISD no. share the same with your supplier of common services. Then you can distribute the credit.

[Ganeshan Kalyani]

As regard accumulated credit in the existing GSTIN you can check for applying refund u/s 54 of CGST Act.

[Vinay Kunte]

Thank you Shri. Kasturi Sethi Ji and Shri. Ganeshan Kalyani Ji, for the valuable guidance for procedure to be adopted for distribution of ITC by the newly registered Input Service distributor and possible Refund of ITC accumulated for the past periods in respect of the Common Services received.

[Amit Agrawal]

Dear Shri Ganeshan Kalyani Ji,

I am not sure I have understood how refund u/s 54 is possible for past accumulated ITC in given scenario.

Request you to please elaborate the same along-with relevant clauses of Section 54 & rules therefor.

[Shilpi Jain]

Agree that refund may not be possible in this case. For complying with law you could consider billing from the gstin which has got the ITC invoices of goods and services used at other gstin, by treating it as a supply of service/goods to other branches.

Else let it get used up in the existing gstin for any output tax liability, though if this is done there could be a dispute from department that credit of another registration is being used at other gstin.

So old ITC cannot be distributed through the new ISD registration

AI Summary

Input Service Distribution: new ISD registration required and old GSTIN invoices cannot be redistributed without supplier reissuing. A separate ISD registration is required for distribution of input tax credit; suppliers must issue invoices to the ISD GSTIN so credits appear in GSTR 6A, and invoices received under the old GSTIN will not automatically transfer, so accumulated ITC under the prior registration generally cannot be distributed through the new ISD. Practical alternatives (refund, inter branch re billing, or using ITC against the original registration's liabilities) have legal and compliance limitations.