Clarification on ITC Eligibility and Refund in Case of Cost Recovery from Foreign Holding Company

[Sudhir M]

ABC Ltd procured goods and services and paid the vendors along with applicable GST. Subsequently, ABC Ltd recovered the amount paid (including GST) from its holding company located outside India.

(i) Whether ABC Ltd is eligible to claim ITC on such expenses?

(ii) If the answer to question (i) is yes, can ABC Limited include this ITC while calculating the refund of unutilised ITC for exports?

AI Summary

Input Tax Credit eligibility confirmed despite cost recovery from foreign holding, and unutilised ITC may be refundable for exports.
ITC is claimable if the procured inputs or services were used in the course or furtherance of business and are not blocked; recovery from a foreign holding does not per se disqualify ITC, though such recovery may itself be a taxable supply. If those outward transactions qualify as exports of services, the taxpayer may claim refund of unutilised ITC for zero-rated supplies under the LUT route, provided place of supply, receipt of consideration in permissible foreign exchange or permitted rupees, and refund procedural conditions are satisfied.