2018 (12) TMI 1089 - AAR - GST

Input tax credit - Whether ITC of IGST paid on bill to ship to model admissible to the applicant? - Held that - M/s Umax Packaging Jodhpur is acting as a third party, directing M/S Uma Polymers, Guwahati to despatch the goods directly to M/s. Pratap Snacks Ltd., Guwahati. M/s. Uma Polymers, Guwahati would accordingly bill to the applicant and ship to M/S Pratap Snacks Ltd., Guwahati. Where the goods or services or both are used by the registered person partly for the purpose of any business and partly for other purposes, the amount of credit shall be restricted to so much of the input tax as is attributable to the purposes of his business - it is deemed that the applicant has received the goods from M/s. Uma Polymers Ltd., Guwahati and thereafter the said goods are despatched to M/s. Pratap Snacks Ltd., Guwahati. M/s. Uma Polymers Ltd., Guwahati can charge IGST from the applicant, against which the applicant ie. M/s. Umax Packaging, Jodhpur are eligible to claim full input tax credit as per the relevant provisions of Section 16 and 17 of Chapter V of CGST Act, 2017. Ruling - The applicant M/s. Umax Packaging, Jodhpur is eligible to claim the input tax credit (ITC) of IGST paid on bill to ship to model as per the relevant provisions of Section 16 and 17 of Chapter V of CGST Act, 2017.

Summary

Issues:
1. Admissibility of input tax credit of tax paid or deemed to have been paid under Section 97 (2) (d) of CGST/RGST Act 2017.

Analysis:
The applicant, engaged in manufacturing plastic pouches, sought an advance ruling on the admissibility of input tax credit of IGST charged by M/S Uma Polymers Ltd. The applicant proposed a transaction involving purchasing goods from M/S Uma Polymers Ltd. and supplying them to M/S Pratap Snacks Ltd. in a 'bill to-ship to' model. During the personal hearing, the applicant reiterated their submissions. The ruling authority examined the case, considering the provisions of the CGST Act, 2017.

The ruling authority found that the transaction between the parties constituted a 'bill to-ship to' model, where goods were directed to be delivered by M/S Uma Polymers Ltd. to M/S Pratap Snacks Ltd. through the applicant. This arrangement fell under Section 10 (1) (b) of the IGST Act, where the place of supply is deemed to be the principal place of business of the third party directing the delivery. Additionally, the authority referenced Section 16 and 17 of the CGST Act, 2017, which outline conditions for claiming input tax credit and the restriction on credit for mixed-use goods or services.

Based on the analysis, the ruling concluded that the applicant was eligible to claim input tax credit of IGST paid in the 'bill to-ship to' model as per the provisions of Section 16 and 17 of the CGST Act, 2017. The ruling clarified that M/S Uma Polymers Ltd. could charge IGST to the applicant, who, in turn, could claim full input tax credit in compliance with the relevant legal provisions.

Therefore, the ruling granted the applicant, M/S Umax Packaging, Jodhpur, the right to avail the input tax credit of IGST paid in the 'bill to-ship to' model, in accordance with the specified sections of the CGST Act, 2017.