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CA Final · Indirect Tax Laws · Input Tax Credit

Godavari Infra Ltd, Hyderabad, is an ISD. A GST-registered person with the same PAN and the same State code as the ISD pays tax under reverse charge on a common input service attributable to distinct persons. Which statement correctly describes the permitted procedure?

The registered person having the same PAN and State code as the ISD may issue an invoice, credit or debit note to transfer the credit on such reverse charge common input services to the ISD, and the ISD then distributes it under the normal procedure for distribution of credit.

  1. ASuch credit cannot be distributed through the ISD under any circumstances
  2. BThe registered person may issue an invoice, credit or debit note to transfer the credit of such common input services to the ISD, which distributes it under the normal distribution procedureCorrect
  3. CThe ISD must issue a tax invoice charging GST to each recipient for the amount
  4. DThe registered person may distribute the credit directly to other States without the ISD

Explanation

For input services attributable to one or more distinct persons and subject to reverse charge, a registered person with the same PAN and State code as the ISD may issue an invoice, credit or debit note to transfer the credit to the ISD. The ISD then distributes it in the manner provided in sub-rule (1). The ISD invoice is only for distribution of credit, not a tax invoice charging GST.

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