Opting To Pay Tax At Lower Rate By Not Availing ITC Forfeits Right To Avail Input Tax Credit: AAR
Mariya Paliwala
7 May 2024 1:15 PM IST
The Telangana Authority of Advance Ruling (AAR) has held that the applicant by opting to pay tax at a lower rate by not availing input tax credit on the goods and services used in his supplies has forfeited his right to avail input tax credit.The bench of S.V. Kasi Visweswara Rao and Sahil Inamdar has observed that the supply of car was made in the month of July 2023 when the applicant was...
The Telangana Authority of Advance Ruling (AAR) has held that the applicant by opting to pay tax at a lower rate by not availing input tax credit on the goods and services used in his supplies has forfeited his right to avail input tax credit.
The bench of S.V. Kasi Visweswara Rao and Sahil Inamdar has observed that the supply of car was made in the month of July 2023 when the applicant was still availing the lower rate of tax on his supplies by forfeiting is right to claim input tax credit on purchase of goods and services and hence the ITC pertaining to the purchase of car is not available to the applicant.
The applicant, Noori travels provides the services of Transport of passenger services by any Motor vehicle designed to carry passengers where the cost of fuel is included in the consideration charged from the service recipient.
The applicant paid the 5% GST on the output services, with limited ITC. As per notification, "the GST to be collecting from recipient at the rate of 5%, provided that credit of Input tax charged on goods and services used in supplying the services, other than the input tax credit of input service in the same line of business (i.e. services procured from another service provider of transporting passenger in motor vehicles or rent of a motor vehicle), has not been taken."
The applicant followed the above policy till 31.07.2023. The applicant changed Output tax rate from 5% to 12% with full ITC. The applicant filed a letter at the GST office. As a result the applicant collected 12% Output and paid to the government with effect from 01.08.23. The applicant utilised the Input tax Credit received on input services, goods, and vehicle purchases.
The applicant purchased a New car, Mercedes Benz. The applicant paid a GST amount of Rs. 13,94,702. The applicant is proposing to take this GST amount of Rs. 13,94,702 as eligible input tax credit, and propose to utilise the GST amount of Rs 13,94,702 proportionally over a period of 5 Years.
The applicant verified GST Records (GSTR 2B), the invoice was uploaded by the supplier in July 2023 GSTR 2B Return, but the purchase invoices issued are dated 4.8.2023 and Sale certificate (form 21) issued as on 4.8.2023.
The applicant sought the advance ruling on the issue whether the GST amount of Rs.13,94,702 can be availed as input tax credit.
The AAR held that the supply of car was made in the month of July 2023 when the applicant was still availing the lower rate of tax on his supplies by forfeiting is right to claim input tax credit on purchase of goods and services and hence the ITC pertaining to the purchase of car is not available to the applicant.
Applicant's Name: Noori Travels
Date: 01.05.2024
