PLANT & MACHINERY- INPUT TAX CREDIT. Section 17[5][d] Vs Section 18[6]

[Sadanand Bulbule]

Dear experts

The provision of Section 18[6] of the CGST Act reads asunder:

6) In case of supply of capital goods or plant and machinery, on which input tax credit has been taken, the registered person shall pay an amount equal to the input tax credit taken on the said capital goods or plant and machinery reduced by such percentage points as may be prescribed or the tax on the transaction value of such capital goods or plant and machinery determined under section 15, whichever is higher:

Provided that where refractory bricks, moulds and dies, jigs and fixtures are supplied as scrap, the taxable person may pay tax on the transaction value of such goods determined under section 15.

Query:

Coming back to the retrospectively amended Section 17[5][d] governing the entitlement of ITC on Plant & Machinery, what is the significance and implication of Section 18[6] on such ITC availed under Section 17[5][d]? What the beneficiary of such ITC needs to do? Plz clarify.

AI Summary

Taxpayer seeks clarity on input tax credit for plant machinery under Section 17(5)(d) and Section 18(6) amid pending state amendments A taxpayer queries about the interaction between Section 17(5)(d) and Section 18(6) of the CGST Act regarding input tax credit on plant and machinery. The discussion highlights that while the CGST Act was retrospectively amended following the Safari Retreat case judgment, corresponding amendments to SGST Acts by state assemblies remain pending. This creates uncertainty for taxpayers claiming input tax credit on plant and machinery, as Section 18(6) requires payment of input tax credit taken when such capital goods are supplied. The respondent advises caution in utilizing such credits until state legislation aligns with central amendments, and suggests authorities should exercise patience in enforcement until corresponding state amendments are implemented retrospectively.