Facts: M/s GKB Lens Pvt. Ltd., re-seller and importer of Sun Glasses, Frames, Lenses, Contact Lenses, etc, having its Head Office in West Bengal, transferring, inter alia, goods, namely, Optical Lenses and Frames for Spectacles and Accessories, from Head Office in West Bengal to its branches in other States.
The AAR of West Bengal vide 07/WBAAR/2018-19 dated May 30, 2018 stated that the recipient will be eligible to take full input tax credit of the amount of tax paid by the suppler as mentioned in the respective invoice or any other document valid under Section 16(2)(a) of GST Act and this Ruling is valid subject to the provisions under Section 103 until and unless declared void under Section 104(1) of the GST Acts.
Issues Involved:
1. Whether the transfer of goods (optical lenses and frames for spectacles and accessories) from Head Office in West Bengal to its branches in other states, can be done at cost price, by applying the second proviso to Rule 28 of CGST Rules, 2017 (instead of 90 % of MRP as required under the First Proviso to Rule 28 of CGST Rules, 2017, And
2. What is meant by the expression ”where the recipient is eligible for full input tax credit” as used in the second proviso to Rule 28 of CGST Rules, 2017.
Held: The Hon’ble AAAR of West Bengal vide Appeal Case No. 05/WBAAAR/APPEAL/2018 dated September 27, 2018 clarified that no input tax credit is available to the recipient of goods/service if the value declared by the supplier in the invoice/debit note is zero. Further, as per Section 16 of the GST Act, it is clear that, inter alia, input tax credit is available only when the recipient is in possession of a tax or debit note issued by the supplier registered under the GST Act, and in case of a supply between distinct and/or related persons, as between Head Office and Branches, the value declared in the invoice shall be deemed to be the open market value of the goods or services supplied. It is therefore clear that if the value declared in such invoice is zero no input tax credit is available to the recipient.
Citation: [2018] 97 taxmann.com 636 (AAAR-WEST BENGAL)