Clarification on availability of input tax credit as per clause (b) of sub-section (2) of section 16 of the Tamil Nadu Goods and Services Tax Act, 2017 in respect of goods which have been delivered by the supplier at his place of business under Ex-Works Contract

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....ction 16 of the Tamil Nadu Goods and Services Tax Act, 2017 in respect of goods which have been delivered by the supplier at his place of business under Ex-Works Contract-Regarding. Ref: Circular No. 241/35/2024-GST, dated 31.12.2024 issued by Government of India, Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes and Customs, GST Policy Wing In the reference cited, the Government of India, Ministry of Finance, Department of Revenue, Central Board of Indirect Taxes and Customs, GST Policy Wing has issued Circular No 241/35/2024-GST, dated 31.12.2024 based on the recommendations of the GST Council. Hence, the corresponding pari-materia circular is issued as below :- 1. Reference has been received by the GST ....

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....otices have been issued to a number of dealers, demanding tax for wrongful availment of ITC for contravention of provisions of clause (b) of sub-section (2) of section 16 of the TNGST Act. 2. In order to ensure uniformity in the implementation of the provisions of law across the field formations, the Commissioner, in exercise of powers conferred by section 168 of the TNGST Act, hereby clarifies the issue as below. 3. Sub-section (2) of section 16 of the TNGST Act is a non-obstante clause to section 16 of the TNGST Act which enlists the conditions, failing which the registered person is not entitled to ITC in respect of supply of goods or services or both. One of the conditions as per clause (b) of the said sub-section (reproduced belo....

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....ontrast to the erstwhile Central Excise regime, where the provisions contemplated physical receipt of the goods at the factory of the manufacturer for taking CENVAT credit on the said goods. In most of the State VAT Acts, the provisions related to credit of the input tax did not have any explicit mention of physical receipt of goods at any particular place and input tax credit was allowed on purchase of goods. 3.2 Explanation to clause (b) of sub-section (2) of section 16 of the TNGST Act provides that the goods would be deemed to have been "received" by the registered person for the purpose of this clause, where: a) the goods are delivered by the supplier to a recipient or to any other person on the direction of such registered....

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....an be considered to have been passed on to the dealer by the OEM upon handing over of the said goods to the transporter at his factory gate, meaning thereby that the goods can be considered to have been delivered to the registered person (the dealer), through the transporter, by the supplier (the OEM) at his factory gate and the supply of the said goods can be considered to have fructified at the factory gate of the OEM, even though the goods may be physically received by the registered person (the dealer) after the transit period. Accordingly, it is clarified that as per Explanation to clause (b) of sub-section (2) of section 16 of TNGST Act, the registered person (the dealer) can be considered to have "received" the said goods at the time....