9911796707
TMI Blog2019 (5) TMI 701X X X X Extracts X X X X X X X X Extracts X X X X ..... and also the monetary value of any act or forbearance. This definition of consideration cast the net so wide that almost no form of payment is excluded. The recipient can pay the supplier consideration by way of setting off book debt. Unless the law specifically restricts the recipient from claiming the input tax credit when consideration is paid through book adjustment, credit of input tax cannot be denied on this ground alone. Rule 19(8) of the West Bengal Value Added Tax Rules, 2005, specifically provided that credit of input tax would be available only if the payment was made by account payee cheque or account payee draft or through electronic banking clearance when such payment exceeded rupees twenty thousand in a day. No such re ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... anufacturing and retailing of jewellery and articles made of gold, silver, platinum, diamonds and other precious stones under the brand name Senco Gold Diamonds . Apart from his own retail stores, the Applicant also maintains a network of franchisee-operated stores. He grants such a franchisee the right and license to operate a showroom and to use, in connection therewith, certain Proprietary Marks and System in accordance with a Franchise Agreement (hereinafter the Agreement), a copy of which has been submitted at the time of Hearing. The Applicant raises tax invoices on the Franchisee for the supply of jewellery and other articles and also for Franchise Support Services in terms of the Agreement periodically. On its part, the Franchise ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the above proviso, the GST Act nowhere makes availing of input tax credit dependent upon the payment to be made for the inward supply. The captioned proviso also does not prescribe or restrict the mode in which the payment has to be made. The Applicant submits that payment through adjustment of the books of accounts is a prevalent commercial practice. Para 42 of Indian Accounting Standard 32 provides that a financial asset and a financial liability shall be offset and the net amount presented in the balance sheet when, and only when, an entity (a) currently has a legally enforceable right to set off the recognized amounts; and (b) intends either to settle on a net basis, or to realize the asset and settle the liability simultaneously. ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... book adjustment instead of through any banking channel. 4. Observation Findings of the Authority 4.1 Section 49(1) deals with the manner in which the supplier shall make payment of tax, interest etc. to the Government to be credited to his electronic cash ledger. The Applicant has made no submission that he intends to deposit tax to the Government in any other manner. 4.2 Section 49(2) provides that the input tax credit as self-assessed in the return of the registered person shall be credited to his electronic credit ledger. It does not prohibit the Applicant from reporting in the return input tax credit when consideration is paid to the supplier by way of book adjustment. In fact, section 49 does not deal ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ment by such assets other than money as good and sufficient discharge of the obligation. Of course, in the payer s books of accounts, such transfer will be reported as a reduction in the book value of the asset being transferred. 4.5 In the present context, consideration , as defined under section 2(31), provides the scope and ambit for modes of payment. It includes, in relation to the supply of goods or services, any payment, made or to be made, whether in money or otherwise, and also the monetary value of any act or forbearance. This definition of consideration cast the net so wide that almost no form of payment is excluded. For example, a mix of money and monetary value of the goods offered together with it is a valid consi ..... X X X X Extracts X X X X X X X X Extracts X X X X
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