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TMI Blog2024 (1) TMI 1094X X X X Extracts X X X X X X X X Extracts X X X X ..... Goods and Services Tax Act, 2017, within a period of thirty days from the date of communication of this Ruling, or within such further time as mentioned in the proviso to Section 100 (2) of the GST Act. Every such appeal shall be filed in accordance with Section 100 (3) of the GST Act and the Rules prescribed there under, and the Regulations prescribed by the West Bengal Authority for Advance Ruling Regulations, 2018. 1.1 At the outset, we would like to make it clear that the Central Goods and Services Tax Act, 2017 (the CGST Act, for short) and the West Bengal Goods and Services Tax Act, 2017 (the WBGST Act, for short) have the same in like matter except for certain provisions. Therefore, unless a mention is specifically made to such di ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... the question raised in the application has neither been decided by nor is pending before any authority under any provision of the GST Act. 1.6 The officer concerned from the revenue has raised no objection to the admission of the application. 1.7 The application is, therefore, admitted. Submission of the Applicant 2.1 The applicant submits that in the proposed 'sale and buyback model', the raw materials required for manufacturing of footwear will be supplied first by the applicant to the outsourced vendors against issue of tax invoice. The vendors will manufacture footwear using the inputs received from the applicant along with other materials as may be purchased from other suppliers. Thereafter the finished goods i.e., footwear will be ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... in book debt (an asset in the payer's books of accounts) is a valid 'consideration'. 2.4 The applicant submits that payment through books of accounts is a prevalent commercial practice in market. Banking on the para 42 of Indian Accounting Standard 32, the applicant states 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. Submission of the Revenue 3.1 The officer concerned from the revenue has refrained from offering any comment regarding t ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... f his business and the said amount shall be credited to the electronic credit ledger of such person. 4.4 Further, sub-section (2) of section 16 of the GST Act has laid down conditions for entitlement of input tax credit. The second proviso to sub-section (2) of section 16 speaks that 'where a recipient fails to pay to the supplier of goods or services or both, other than the supplies on which tax is payable on reverse charge basis, the amount towards the value of supply along with tax payable thereon within a period of one hundred and eighty days from the date of issue of invoice by the supplier, an amount equal to the input tax credit availed by the recipient shall be added to his output tax liability, along with interest thereon, in such ..... X X X X Extracts X X X X X X X X Extracts X X X X ..... when a barber cuts hair in exchange for a painting, hair cut is a supply of services by the barber. It is a consideration for the painting received. Similarly, supply of painting is supply by painter and the painting is the consideration for hair cut. 4.7 We therefore hold that settlement of mutual debts through book adjustment is a valid mode of payment under the GST Act. Recipient can pay the supplier by way of setting book debt since the provision of the Act has not put any restriction in this regard. Therefore, claiming credit of input tax cannot be denied on the sole ground that consideration is paid through book adjustment. In view of above, we rule as under: RULING Question: In case of sale and buyback transactions, whether the ..... X X X X Extracts X X X X X X X X Extracts X X X X
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