Implications of Non-Receipt of Common Service Invoices Under ISD Registration

[Dipika Shetye]

As per the ISD provisions, all invoices for common services—whether pertaining to eligible or ineligible ITC—must be received under the ISD registration. We kindly request you to inform us of the potential implications or consequences if such invoices are not received under the ISD registration and received on Normal Registration

[Sadanand Bulbule]

The wrong receipt of common input services under a normal GST registration [instead of through the ISD registration] is violation of Section 20 of the CGST Act. Further Rule 39 of the CGST Rules prescribes the exclusive procedure of such distribution to multi-location entitles.

In the given set of facts, there is risk of denial or reversal of ITC and remote chance of retrospective correction. Consult the experts for better solution.

This is my perception.

[Ganeshan Kalyani]

Sir, the department may deny the credit taken by you in the regular registration. The credit is not attributable to one location instead the same to be distributed to respective locations. And this is possible or allowed only under Input service distribution registration number. 

[Shilpi Jain]

If common services invoices are taken in a regular registration and then through cross charge distributed to the branches to which this credit pertains, then it is only a procedural lapse of not taking an ISD registration.

However, this will be an issue raised in your GST audit by the department for which litigation will occur. 

AI Summary

Common Service Invoices Must Be Received Under ISD Registration per Section 20 and Rule 39 of CGST Act Under GST law, common service invoices must be received under the Input Service Distributor (ISD) registration as per Section 20 of the CGST Act and Rule 39 of the CGST Rules. Receiving such invoices under a normal registration instead of ISD registration constitutes a violation, potentially leading to denial or reversal of input tax credit (ITC). The credit must be distributed to multiple locations through the ISD registration, and failure to comply may result in audit scrutiny and litigation. While cross-charging from a normal registration to branches may be seen as a procedural lapse, it does not comply with prescribed rules and risks disputes with tax authorities. Expert consultation is advised to address and possibly rectify the issue.