Input Tax Credit of Differential IGST Paid Post On-site Audit by Customs Authorities is Not Allowed | AAR

Case Details: Authority for Advance Rulings, Tamilnadu Mitsubishi Electric India (P.) Ltd., In re - [2024] 160 taxmann.com 372 (AAR-TAMILNADU)

Judiciary and Counsel Details

• • Smt. D. Jayapriya & Smt. T. Indira, Member

Facts of the Case

The applicant was a highly reputed premium brand and Global Leader in Electric and Electronic products and equipment in Air-conditioning Business, Factory Automation, Transportation systems, and power semiconductors. During premises based audit by Customs authorities, it was observed that there were certain mis-classification of goods imported and the applicant made payment.

It filed application for advance ruling to determine whether there would be any restriction on availment of Input Tax Credit of differential IGST paid post on- site audit by customs authorities.

AAR Held

The Authority for Advance Ruling observed that as per Section 17(5), Input Tax credit shall not be available in respect of “any tax paid in accordance with provisions of sections 74, 129 and 130”. In instant case, fact that a penalty at 15% had been paid on tax amount determined by audit officers, would prove that differential tax was determined under provisions of Section 74(5) which in turn involves determination of tax by reason of wilful-misstatement or suppression of facts.

Moreover, the law imposes restriction on availment of Input Tax Credit under Section 17(5) , in respect of any tax ‘not paid / short paid’ in accordance with provisions of section 74, irrespective of fact as to whether proceedings are initiated on basis of audit or on basis of an anti-evasion operation. Thus, it was held that the differential IGST paid by applicant would not become eligible for availment of Input Tax Credit.