- Case Overview: The Bombay High Court allowed Input Tax Credit (ITC) on GST charged by suppliers on advance payments in the L&T IHI Consortium case.
- Facts:
- The Petitioner, an L&T and IHI consortium, contracted to build bridges for MMRDA and subcontracted to L&T and IHI.
- Contracts included milestone payments and GST-charged advance payments.
- The Petitioner challenged GST levy on advances and ITC ineligibility.
- Petitioner’s Arguments:
- GST should only apply to actual supplies, not “supplies to be made.”
- Without ITC eligibility, they would have unutilized ITC by contract end.
- Department’s Arguments:
- Parliament can define “supply” including future supplies.
- ITC is ineligible as services aren’t received and Advance Receipt Vouchers aren’t prescribed ITC documents.
- Court’s Decision:
- Parliament can include “agreed to be made” in the definition of supply.
- ITC is allowed on advances based on Sections 16 and 13 of the CGST Act.
- Advance Receipt Vouchers, though not prescribed by rules, are valid proof of tax payment.
Source Gaba & Co
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