The 2024 edition of the landmark judgments on Input Tax Credit under GST offers important insights into significant rulings made by the Supreme Court and High Courts on a number of controversial GST-related topics.
Input Tax Credit or ITC is the tax that a business pays on a purchase and. that it can use to reduce its tax liability when it makes a sale. In other words, businesses can reduce their tax liability by claiming credit to the extent of GST paid on purchases.
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Bombay High Court
Denying GST ITC On Advance Receipts Would Create Inconsistency And Disrupt Harmonious Functioning Of GST Provisions, Rules Bombay High Court
The Bombay High Court has ruled that denying (Input Tax Credit) ITC on advance receipts would create inconsistency and disrupt the harmonious functioning of GST provisions.
The bench of Justice G. S. Kulkarni and Justice Jitendra Jain has interpreted Section 7 of the Central Goods and Services Tax (CGST) Act, determining that it encompasses “supplies agreed to be made” within the definition of supply. The advance payments received by the petitioner are subject to GST, thereby expanding the definition of a taxable supply.
Madras High Court
The Madras High Court in the case of M/s.ARS Steels and Alloy International Private Limited Versus The State Tax Officer held that the Input Tax Credit (ITC) under GST cannot be claimed on t-shirts and gold coins purchased for sales promotional activity.
The bench of Justice C.Saravanan has observed that as per Section 17(5) of the respective GST enactments, notwithstanding anything contained in sub-section (1) of section 16 and sub- section (1) of section 18, input tax credit shall not be available in respect of the supplies as stipulated in sub-clause (a) to (i) of Section 17 (5) of the respective GST enactments. Sub-clause (h) to Section 17(5) of the respective GST enactments makes it clear that no input tax credit shall be available in respect of the goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples.
Madhya Pradesh High Court
Input Tax Credit Disallowance Can’t Be A Punishment For Late Return Filing : Madhya Pradesh High Court
The Madhya Pradesh High Court has held that the input tax credit (ITC) disallowance cannot be a punishment for late return filing.
The bench of Justice Sushrut Arvind Dharmadhikari and Justice Binod Kumar Dwivedi has observed that disallowing Input Tax Credit for late returns is arbitrary as late fees and interest serve as sufficient deterrents.
The bench stated that the provision of Section 16(4) of the CGST Act which restricts the claim of ITC only on the ground that a return is filed after the date prescribed is arbitrary as well as the taxpayer who is claiming the ITC has already made the payment of tax to the supplier from whom the foods and services has been received. The payments include both cost of service or goods and the amount of Tax, thus the taxpayer cannot be deprived from his right to claim ITC.
Jharkhand High Court
Jharkhand High Court Allows Input Tax Credit On Delayed Returns
The Jharkhand High Court has allowed the Input Tax Credit on delayed returns.
The bench of Chief Justice M. S. Ramachandra Rao and Justice Deepak Roshan has observed that Clause (5) of Section 16 inserted by the Finance (No.2) Act, 2024, with effect from 01.07.2017, the department directed to allow the petitioner to take Input Tax Credit in respect of delayed returns filed for the Financial Year 2017-18, and the interest and penalty levied on the petitioner by the respondents shall be refunded with 6% p.a interest from the date of such collection till the date of repayment.
Kerala High Court
This Ruling By Kerala High Court Opens Door For Revisiting Denied GST ITC Claims
The Kerala High Court in the case of Lloyd Insulations India Limited Versus State Tax Officer has opened the door for revisiting denied GST ITC claims.
The bench of Justice Gopinath P. has observed that on account of notification of Sub-Section (5) of Section 16 of the CGST/SGST Acts, the petitioner will be entitled to input tax credit, which has been denied to the petitioner.
Punjab & Haryana High Court
BMW Entitled To ITC On Demo Vehicles: Punjab & Haryana High Court Quashes AAAR’s Ruling
The Punjab and Haryana High Court while quashing the ruling given by Appellate Authority of Advance Ruling (AAAR) held that BMW is entitled to Input Tax Credit (ITC) on demo vehicles.
The bench of Justice Sanjeev Prakash Sharma and Justice Sanjay Vashisth has observed that Circular No.231/25-HGST/2024/GST-II (CBIC Circular No.231/25/2024- GST, dated 11.09.2024), dated 13th September 2024 discussed the availability of Input Tax Credit on demo vehicles, which are motor vehicles for transportation of passengers having approved seating capacity of not more than 13 persons in terms of clause (a) of section 17(5) of Haryana Goods & Services Tax Act, 2017.
