Sequence of events:
A. Goods are billed to us my manufacturer based in state A.
B. Handed over to GST registered transporter to transport to us in state B.
C. Payment is made by us before receipt of goods in almost all cases.
D. Transporter fills part B for e-waybill generation and dispatches goods from state A to state B which are more than 1000 km apart.
E. Transporter bills us for transportation on a monthly basis and we make the payment and also pay a 5% GST as RCM with our monthly 3B.
F. Goods are kept in most cases at transporters warehouse much beyond the e-waybill validity period of 15 days.
G. Goods are shifted to our warehouses or shop on a periodic basis in the next 2-3 months and at times even 5-6 months based on demand. All our warehouses are in state B itself and have been listed in additional places of business.
H. Supplier i.e. manufacturer files GST returns in a timely manner and all invoices are showing up in the GST2A with amounts eligible for ITC.
1. At what time in the above sequence of events are we eligible to take ITC for the goods invoiced by the manufacturer?
2. Is it okay if the goods are not "received" by us in our warehouses or shops within the validity of the e-waybill?
3. If the answer to 1. is G, then what is the maximum period that we can stretch to avail the ITC?
You need to refer section 16 of CGST Act, which reads as:
16. (1) Every registered person shall, subject to such conditions and restrictions as
may be prescribed and in the manner specified in section 49, be entitled to take credit of input tax charged on any supply of goods or services or both to him which are used or intended to be used in the course or furtherance of his business and the said amount shall be credited to the electronic credit ledger of such person.
(2) Notwithstanding anything contained in this section, no registered person shall be entitled to the credit of any input tax in respect of any supply of goods or services or both to him unless,––
(a) he is in possession of a tax invoice or debit note issued by a supplier registered under this Act, or such other tax paying documents as may be prescribed;
(b) he has received the goods or services or both.
So you can take input credit, if you fulfill both conditions:
You got tax invoice but not goods at your registered premises, now question remains what is receipt of goods.
Lets understand definition of Inward Supply:
(67) “inward supply” in relation to a person, shall mean receipt of goods or
services or both whether by purchase, acquisition or any other means with or without
Now again read about location of supply:
(70) “location of the recipient of services” means,—
(a) where a supply is received at a place of business for which the
registration has been obtained, the location of such place of business;
(b) where a supply is received at a place other than the place of business
for which registration has been obtained (a fixed establishment elsewhere), the
location of such fixed establishment;
(c) where a supply is received at more than one establishment, whether the
place of business or fixed establishment, the location of the establishment most
directly concerned with the receipt of the supply; and
(d) in absence of such places, the location of the usual place of residence
of the recipient;
From all these definitions, one can say that you received goods though not at your principal place of business but other location. You have not received supply at your registered location but other location. Though goods are kept at place of transporter, but still you are title holder of goods and posses all risks associated with goods.
In my opinion you are eligible to take input credit once goods reach at the place of transporter. You must have an agreement with transporter for holding of goods and treating transporter place as a godown.
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