Page 27 - Ch_10 ITC

Note:-
(i) All the conditions necessary for availing input tax credit have been fulfilled.

(ii) Ignore interest, if any [CA Inter MTP Mar 19]
Answer:-
(i) Computation of net GST payable for the financial year 20XX-XY:-
Particulars Value(`) CGST (`) SGST (`)
Tax Liability

Intra-State supplies made to registered persons 10,00,000 90,000 90,000
Intra-State supplies made to unregistered persons 2,00,000 18,000 18,000

Total (A) 10,8000 108000
Input Tax Credit
Supply of iron in lots by M/s. Hard Limited [Note-1] 10,00,000 - -
Supply of IT engineering service [Note-2] 11,00,000 99,000 99,000
Total (B) 99,000 99,000

Net GST payable (A)-(B) 9,000 9,000
Notes:-
1) 1st proviso to section 16(2) of CGST Act states that if goods against an invoice are received in lots or
instalments, the registered person is entitled to take credit upon receipt of last lot or instalment. Although

900 MT of iron are received in financial year 20XX-XY, last lot is received after FY 20XX-XY only, i.e. on 5
April, 20XY & thus ITC is not available in FY 20XX-XY.
2) As per section 16 of CGST Act, registered person can take credit of input tax charged on his inward supplies
which are used in the course of business on receipt of said services. Thus, full ITC Rs. 1,98,000 (i.e. Rs
99000 CGST + Rs 99000 SGST) can be claimed in financial year 20XX-XY.

(ii) Input tax credit to be reversed in Financial Year 20XY-YZ:-
Particulars Amount (`)
Total value of procurement of IT engineering service 11,00,000

Add: Total GST on the above value @18% [CGST + SGST] 1,98,000
Value including GST 12,98,000
Amount paid for the said service including GST [Rs. 4,13,000 + Rs. 2,95,000] 7,08,000
Amount [value along with tax payable thereon] not paid for the said service 5,90,000

ITC to be reversed [Rs. 5,90,000 x 18/118] 90,000
Explanation:-
Ü Proviso to section 16(2) of CGST Act read with rule 37 of CGST rules states that recipient is required to pay
the Full consideration along with tax within 180 days from the date of issue of invoice. This condition is not

applicable where tax is payable on reverse charge basis. If recipient fails to do so, then corresponding
credits availed in respect of such supply, proportionate to the amount not paid to the supplier, by him
will be added to his output tax liability or it shall be reversed along with interest.
Ü If part payment is made against an invoice, proportionate ITC is available for the tax involved.
Ü In given case, proportionate ITC availed needs to be reversed on the value along with tax payable thereon

which has not been paid by M/s Comfortable (P) Ltd. to M/s Dynamic Infotech (P) Ltd. within 180 days
from invoice date.
Ü This reversal will be done in financial year 20XY-YZ when 180 days from invoice date expires.
Ü There is no time limit to re-avail the credit when the payment is made later on.

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