Circular No.

Key Clarifications

• For wrong availment and utilisation of input tax credit (‘ITC’) on account of IGST, interest liability to arise only when balance in electronic credit ledger (‘ECrL’) of IGST, CGST and SGST taken together falls below the wrongly availed ITC of IGST
• Balance in ECrL of cess cannot be consider when calculating interest in case of wrong availment of ITC on IGST, CGST, SGST

• Procedure prescribed in Circular No. 183/15/2022-GST dated 27 Dec 2022 to obtain certification from vendor/ practicing Chartered Accountant for verification of ITC in cases involving a difference in ITC claimed in Form GSTR-3B vis-a-vis Form GSTR-2A shall be applicable upto 9 October 2019
• Above procedure to apply even for the period 10 October 2019 to 31 December 2021, subject to the limits of ITC as prescribed under CGST Rules, 2017 during such period

• No GST to apply on replacement of any parts or repair services without any consideration by manufacturer/ distributor during warranty. However, GST would be applicable in case any additional consideration is charged
• Replacement of parts by the distributor from its own stock or by purchasing from third party and consideration received from the manufacturer, GST would be charged by the distributor and manufacturer would be eligible to claim ITC
• Where the distributor replaces any part under warranty out of supply already received and the manufacturer issues credit notes to the distributor for replaced part, manufacturer is eligible to reduce its output tax liability subject to condition that the distributor reverses the ITC

• Activity of holding shares of subsidiary company by the holding company cannot be treated as supply of services and no GST would be applicable

• Restriction on availability of refund of accumulated ITC based on ITC available in GSTR-2B would be applicable only for refund claim for the tax period Jan 2022 onwards. For the earlier periods, where refund has already been issued, cases shall not be reopened on the basis of this clarification
• Where the goods are exported or payment for export of services has been realised after the time limits prescribed under the GST law, the benefit of zero-rated supply would not be denied
• Cases where exporter deposited tax and interest voluntarily (after the time limits prescribed within which goods are required to be exported or payment for exports of services to be realised), they would be eligible to claim refund of tax upon export of goods or upon realising payment for export of services (except the interest paid)

• In respect of common input services procured by the Head Office (‘HO’) from third party vendors (attributable to both the HO and Branch Offices (‘BO’)], the HO can distribute such ITC, either through:
• A tax invoice for cross charges; or
• Input Service Distributor (‘ISD’) mechanism (which is not mandatory)
• In cases, where the BO is eligible for full ITC;
  • Value declared in invoice by the HO shall be deemed to be the open market value even if any components like employee cost, etc. are not included
  • Value of service is deemed to be NIL, if HO has not issued any invoice
• In case where the BO is not eligible for full ITC, cost of employee’s salary is not mandatorily required to be included while computing the taxable value