TaxTMI 
Clarification on Issues pertaining to Input Service Distributor.
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....s of the law across the field formations, the Commissioner, in exercise of its powers conferred under section 168(1) of the UPGST Act, hereby clarifies the issues raised as follows: Table S. No. Issue Clarification 1. Whether ISD registration is required for each business vertical/place of business within the same State/UT? a) ISD has been defined under section 2(61) of UPGST Act, 2017, to mean an office of supplier of goods or services or both, which receives input service invoices, including invoices in respect of services liable to tax under reverse charge, for or on behalf of distinct persons referred in section 25 of UPGST Act, 2017, and liable to distribute input tax credit in respect of such invoices in the manner provided in section 20 of UPGST Act, 2017. b) As per provisions of section 25(2) and section 25(4) of UPGST Act, 2017, if separate registrations have been obtained for separate business verticals or places of business within a State or UT, before or after 01.02.2019 respectively, then each such registrant is to be treated as a distinct person under the Act. c) A plain reading of the above-mentioned provisions indicates that there is no ba....
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.... UPGST Aet. 2017. ii. It is the recipients of credit, who are liable to comply with the conditions for being eligible to the input tax credit, including the conditions stipulated in section 16 or section 17 of UPGST Act, 2017 and rules made thereunder iii. In case credit is distributed by the ISD, in contravention of provisions of section 20 of UPGST Act. 2017, the ISD is liable to penalty under clause (1x) of section 122(1) of UPGST Act. 2017, and if such contravention results in excess distribution of credit to one or more recipients of credit, the excess credit so distributed is liable to be recovered from such recipients of credit, in terms of the provisions under section 21 of UPGST Act. 2017. 3. What does the condition of "input tax credit available for distribution in a month" being required to be distributed in the same month as per rule 39(1)(a) of UPGST Rules, 2017 mean? a) In terms of section 20(2) of UPGST Act, 2017 read with rule 39(1)(a) of UPGST Rules, 2017, the input tax credit available for distribution in a month, is required to be distributed by the ISD, in the same month and the details thereof are required to be Included in FORM GSTR-....
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....ibute the credit in the manner provided in section 20 of UPGST Act, 2017 and it is the recipients of credit, who are liable to comply with the conditions for being eligible to the input tax credit under section 16 or section 17 of UPGST Act, 2017. b) Accordingly, it is clarified that ISD should distribute the entire input tax credit available to it for distribution to the recipients of credit to whom it is attributable to, and it is such recipients of credit who are required to make reversals of input tax credit under section 17(1) or section 17(2) of UPGST Act, 2017 read with rule 42 and rule 43 of UPGST Rules, 2017 or under section 17(4) of UPGST Act, 2017 read with rule 38 of UPGST Rules, 2017, as the case may be. 5. Whether the amount declared in an invoice, credit or debit note, issued by a registered person having same PAN and State code as the ISD, to an ISD, under rule 54(1A) of UPGST Rules, 2017, should be included in computation of "turnover in State" or "turnover in Union territory" under section 2(112) of UPGST Act, 2017? a) Rule 54(1A) of UPGST Rules, 2017 provides for issuance of an invoice, credit note, debit note by a regular registrant, having same PAN ....
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....t services attributable to one or more distinct persons, which is transferred by the registered person having same PAN and State code as the ISD in terms of rule 54(1A) of UPGST Rules, 2017, is to be treated as input tax credit of the said person having same PAN and same State code as ISD, and whether it can be included as "NET ITC" for the computation of refund amount under rule 89(4) and rule 89(5) of UPGST Rules, 2017? As already discussed in Sr. No. 5 above, rule 54(1A) of UPGST Rules, 2017 is merely a credit transferring mechanism. Accordingly it is clarified that credit pertaining to input services attributable to one or more distinct persons, which is transferred by the registered person, having same PAN and State code as the ISD, in terms of rule 54(1A), does not constitute input tax credit in respect of inward supply of such person and is merely required to be transferred to the ISD, as such, and therefore, the same does not qualify as "NET ITC" for the computation of refund amount under rule 89(4) and rule 89(5) of UPGST Rules, 2017. 7. Whether in respect of the credit pertaining to input services attributable to one or more distinct persons, which is transferred....