ITC ON IMPORT

[GURURAJAN RAMASAMY]

ITC can be claimed on the basis of BOE before receipt of good in to the business place from Port of Import?

[KASTURI SETHI]

Section 16 of CGST Act should be read with Rule 36 of CGST Rules and Section 20(iv) of IGST Act. Answer is NO.

[Shilpi Jain]

The requirement in the law is receipt of goods. It does not mention that the goods need to be received at the registrered place of business.

So there is a possibility of taking a view that the moment goods are cleared and constructively in the custody of the importer, credit is eligible.

[KALLESHAMURTHY MURTHY K.N.]

Dear Sir, 

ITC cannot be availed based on invoice or BOE, goods must be received at the designated place indicated in the invoice and not elsewhere. 

[KASTURI SETHI]

Sh.Kalleshamurthy Murthy Ji,

Sir, Your reply is perfect. 

[VIPUL JHAVERI]

ITC IS AVAILABLE ON ITEMS USED FOR BUSINESS OR "INTENDED TO BE USED"

FOR BUSINESS

TWO PLACES AND TRANSIT INVOLVED HERE -

PLACE- A PORT OF IMPORT

PLACE B-Business Place and

Transit - is remarked for ITC to avail

 basically once duty is paid - ownership shifts to importer and if goods are lost in transit importer has to bear its risk - so once ownership rights dwells on importer on release from port - BOE is valid document to avail ITC (rule 36(1)(d))

S-16(2)(b)- for received of goods in explanation provide for deeming "received of goods" with this background and understanding, IMHO getting ITC seems possible sans physical inward of goods at "business place" as goods are "already received" and valid document "BOE" already with importer 

[KASTURI SETHI]

Sh. Vipul Jhaveri Ji,

With reference to your post on the subject issue, my views are as under :-

ITC IS AVAILABLE ON ITEMS USED FOR BUSINESS OR “INTENDED TO BE USED”

FOR BUSINESS : Agree. It is as per Section 16

TWO PLACES AND TRANSIT INVOLVED HERE - Agreed.

PLACE- A PORT OF IMPORT

PLACE B-Business Place and

Transit - is remarked for ITC to avail: This is the issue.

basically once duty is paid - ownership shifts to importer and if goods are lost in transit importer has to bear its risk - so once the ownership rights dwells on importer on release from port - BOE is valid document to avail ITC (Rule 36(1)(d) ) : Agree.

S-16(2)(b)- for received of goods in explanation provide for deeming “received of goods” with this background and understanding, IMHO getting ITC seems possible sans physical inward of goods at “business place” as goods are “already received” and valid document “BOE” already with importer :

Do not agree. The 'deemed clause' is for special circumstances and NOT in a routine manner of taking ITC.

Otherwise, practically, do you think there is no possibility of misuse before reaching the goods in the business premises ? The graph of availing ITC fraudulently has skyrocketed in GST regime. Facts and figures on the records of Govt. speak.

Otherwise, technically, ITC is not admissible in this scenario.

I welcome contrary views on this issue, if any.

Disclaimer : These are my personal views and meant for academic interest and not meant for any court proceedings.

[KASTURI SETHI]

In continuation of my post, I add as under :-

The Explanation to clause (b) (i) of Section 16 (2) of CGST Act, inter alia, covers the receipt of goods in the 'bill-to-ship-to ' model and the phrase, 'or otherwise' signifies 'on his own account'.

 

AI Summary

Input Tax Credit eligibility may require physical receipt despite customs clearance, limiting claims based solely on bill of entry.
Whether Input Tax Credit can be claimed on the basis of a bill of entry before goods arrive at the registered business premises is contested. One view ties credit to statutory receipt and documentary rules, denying credit until goods are shown as received at the business place. An alternative view treats customs clearance and duty payment as transferring ownership and constituting constructive receipt, allowing a bill of entry and related documents to satisfy eligibility, supported by a deeming provision; however, concerns about misuse and that the deeming clause is not for routine claims are emphasized.