ITC of GST Paid in Haryana is not available in Rajasthan

Facts of the case:

• The applicant is Rajasthan based businessman engaged in the development, designing and trading as well as export of computer software.
• The applicant claims ITC on taxes paid on goods and services procured and are used in the course of furtherance of business and the place of supply of such goods and services is the state of registered place of business – Rajasthan.
• The applicant had paid the CGST and SGST on the hotel service charges incurred in Haryana for business purpose and claimed ITC of CGST (being a central tax) paid on the hotel services procured by him.
• In the case, Rajasthan AAR ruled that as both the supplier of services and the place of supply are outside the state of Rajasthan, therefore ITC of CGST paid in Haryana would not be available to the Applicant.
• Aggrieved by the order, the applicant filed an appeal before the Rajasthan AAAR.

Applicant’s Contention:

• The applicant contended that hotel services and consequential CGST and Haryana SGST are incurred exclusively for furtherance of business and as per provisions of law, it is entitled to claim ITC of tax paid on inward supply of goods/services which are used or intended to be used for the furtherance of the business.
• The applicant further contended that as per CGST Act, there does not require any correlation between admissibility of credit and place of supply.
• The applicant further contended that the AAR had decided the case without giving any specific reference to any provision of the law and had gone beyond the question raised by him by observing admissibility of ITC in respect of state, while the question was in respect of ITC paid in form of CGST to the Central Government only.

Rajasthan AAAR Observation and Ruling:

• The Rajasthan AAR observed that the applicant was sure about the inadmissibility of SGST paid in Haryana state. Therefore, the only question arises for the admissibility of CGST paid in Haryana.
• It was held that both the taxes i.e. SGST and CGST go ‘hand in hand’ and as per Rajasthan GST Act, it allows ITC of only SGST paid in Rajasthan. Accordingly, it naturally flows that if ITC of SGST (paid in other states) is not admissible, ITC of CGST should also not be admissible.
• It was also stated that ITC of CGST would be available to a person registered in Rajasthan only if the location of the supplier and place of supply of services are in Rajasthan.
• Thus, the Rajasthan AAAR upheld the order of Rajasthan AAR i.e. ITC of CGST paid in Haryana is not admissible to the applicant in Rajasthan if place of supplier and place of supply are both in Haryana.

M/s. IMF Cognitive Technology Private Limited vs Rajasthan AAAR