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TMI BlogInput tax creditX X X X Extracts X X X X X X X X Extracts X X X X ..... Dear Sir My friend company having Two GST Number, one branch in west Bengal and another in state of Tamilnadu. Raw material is procured at Tamilnadu, which in turn transfer the goods to West Bengal branch for manufacturing , now they stopped purchasing from Tamilnadu and procuring goods from 3rd party from this year , but there is unutilized input is pending in Tamilnadu of previous year, to t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ransfer the unutilized ITC to West Bengal they plan to give one rate difference Debit note to West Bengal Branch dated 31st march. My friend Question is 1 whether issuing debit note for rate difference is correct as per the GST law. 2 At what valuation/Profit they can transfer goods from Tamilnadu to West Bengal. Because during the year Tamilnadu has supplied goods at cost. 3 The ITC has ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... remained pending because certain party/Govt not filed their Return on time. 4 Please suggest what documentation is required for raising debit note. - Reply By Ganeshan Kalyani - The Reply = If the receiving unit is able to take credit then any value can be transaction value. - Reply By Shilpi Jain - The Reply = You could also consider purchasing some materials in tn under bill to ship to m ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... odel and then bill the WB branch at a higher rate to trfr the credit- instead of jus plainly issuing a rate difference credit note. - Reply By Ravinesh Sinha - The Reply = Whether Tamilnadu unit is closed ? Otherwise the said unit may utilise the ITC for other suppies to other customer . However it is not advisable to raise debit note for transfer of ITC as department may issue demand of inter ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... st along with penalty for such under valued clearance and late payment of tax . - Reply By Ravinesh Sinha - The Reply = Whether Tamil Nadu unit is closed ? Otherwise the said unit may utilise the ITC for other supplies to other customer . However it is not advisable to raise debit note for transfer of ITC as department may issue demand of interest along with penalty for such under valu ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ed clearance and late payment of tax . - Reply By Amit Agrawal - The Reply = Section 34 (3) of the CGST Act, 2017 reads as under: Where one or more tax invoices have] been issued for supply of any goods or services or both and the taxable value or tax charged in that tax invoice is found to be less than the taxable value or tax payable in respect of such supply , the registered pers ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... on, who has supplied such goods or services or both, shall issue to the recipient 4[one or more debit notes for supplies made in a financial year] containing such particulars as may be prescribed. As understood by me, Tamilnadu unit transferred goods at cost and presumably, tax charged paid was equal to ITC taken against those goods. In such a scenario, question of raising debit-note doe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... s not arise in my view as 'the taxable value or tax charged in that tax invoice was not less than the taxable value or tax payable in respect of such supply'. Second proviso under Rule 28 of the CGST Rules, 2017 cannot be used to raise debit-note u/s 34 (3) , in my view, just to transfer ITC balance from Tamilnadu to West Bengal in given circumstances. All above are strictly pe ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... rsonal views of mine and the same should not be construed as professional advice / suggestion. - Reply By Amit Agrawal - The Reply = In continuation of my last post: If subject supply is covered under second proviso under Rule 28 of the CGST Rules, 2017 , Dept. will argue that option of raising debit-note u/s 34 (3) does not arise, specially after taking into account other facts state ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... d earlier. And hence, in my humble view, transfer of any unutilized ITC balance (through such dubious routes) can be disputed by Tax-Dept. and recovered with interest and penalty. All above are strictly personal views of mine and the same should not be construed as professional advice / suggestion. - Input tax credit - Query Started By: - ashwin bhalakiya Dated:- 4-6-2022 Goods and Serv ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... ices Tax - GST - Got 6 Replies - GST - Discussion Forum - Knowledge Sharing, reply post by an expert, personal opinion Tax Management India - taxmanagementindia - taxmanagement - taxmanagementindia.com - TMI - TaxTMI - TMITax ..... X X X X Extracts X X X X X X X X Extracts X X X X
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