In a significant judgment, the Honβble Bombay High Court upheld the GST levy on advance receipts and overturned the denial of Input Tax Credit on such advances. The courtβs ruling is summarized below:
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The court interpreted Section 7 of the Central Goods and Services Tax (CGST) Act, determining that it encompasses βsupplies agreed to be madeβ within the definition of supply. The court held that advance payments received by the petitioner are subject to GST, thereby expanding the definition of a taxable supply.
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The court ruled that the petitioner is entitled to ITC under Section 16 of the CGST Act, based on the βReceipt Voucherβ issued by the supplier. The court emphasized the need to harmonize the provisions of Section 16(2)(b) with Section 16(1), which allows credit for inputs βintended to be usedβ in the course or furtherance of business. Denying ITC to the petitioner would create an inconsistency and disrupt the harmonious functioning of GST provisions.
Case: L&T Judgment 2980 of 2019 dated 14.11.2024 ODT
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