Clarification on issues related to registration as a CTP & recovery of excess ITC distributed by an Input Service distributor

S. No

Issue

Clarification

1

Whether the amount required to be deposited as advance tax while taking registration as a CTP should be 100% of the estimated gross tax liability or the estimated tax liability payable in cash should be calculated after deducting the due eligible ITC which might be available to CTP ?

1. It has been noted that while applying for registration as a CTP, the FORM GST REG-1 (S.No.11) seeks information regarding the “estimated net tax liability” only and not the gross tax liability.

2. It is clarified that the amount of advance tax which a CTP is required to deposit while obtaining registration should be calculated after considering the due eligible ITC which might be available to such taxable person.

2

As per section 27 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the said Act), period of operation by CTP is 90 days with provision for extension of same by the proper officer for a further period not exceeding ninety days.

Various representations have been received for further extension of the said period beyond the period of 180 days, as mandated in law.

1. It is clarified that in case of long running exhibitions (for a period more than 180 days), the taxable person cannot be treated as a CTP and thus such person would be required to obtain registration as a normal taxable person.

2. While applying for normal registration the said person should upload a copy of the allotment letter granting him permission to use the premises for the exhibition and the allotment letter/consent letter shall be treated as the proper document as a proof for his place of business.

3. In such cases he would not be required to pay advance tax for the purpose of registration.

4. He can surrender such registration once the exhibition is over.

3

Representations have been received regarding the manner of recovery of excess credit distributed by an ISD in contravention of the provisions contained in section 20 of the CGST Act.

1. According to Section 21 of the CGST Act where the ISD distributes the credit in contravention of the provisions contained in section 20 of the CGST Act resulting in excess distribution of credit to one or more recipients of credit, the excess credit so distributed shall be recovered from such recipients along with interest and penalty if any.

2. The recipient unit(s) who have received excess credit from ISD may deposit the said excess amount voluntarily along with interest if any by using FORM GST DRC-03.

3. If the said recipient unit(s) does not come forward voluntarily, necessary proceedings may be initiated against the said unit(s) under the provisions of section 73 or 74 of the CGST Act as the case may be. FORM GST DRC-07 can be used by the tax authorities in such cases.

4. The ISD would also be liable to a general penalty under the provisions contained in section 122(1)(ix) of the CGST Act.