Indian courts issue rulings on GST Input Tax Credit eligibility

Various Indian judicial and tax authorities have issued rulings regarding the eligibility and restrictions of Input Tax Credit (ITC) under the Goods and Services Tax (GST) framework.

In Sikkim, the High Court set aside an order denying budgetary support to Cipla Ltd, ruling that authorities must consider Chartered Accountant certificates regarding ITC utilization rather than ignoring discrepancies between declarations and certificates. In Gujarat, the High Court held that blocking ITC under Section 17(5) of the CGST Act does not apply when no taxable supply exists, specifically in cases involving the acquisition of leasehold rights without construction.

In Tamil Nadu, the Authority for Advance Ruling (AAR) denied ITC on land survey charges for a golf club, citing that such services were linked to the development of immovable property or involved land intended for surrender to the Forest Department. Additionally, the Kerala AAR clarified that printing services where the customer supplies both paper and content qualify as “manufacturing services on physical inputs owned by others” under SAC 9988.

Furthermore, Supreme Court orders addressed supplier-side defaults. One ruling upheld the requirement that tax must actually be paid to the government for a purchaser to claim ITC, while another clarified that the harsher fraud-related recovery provisions cannot be invoked without proof of willful misstatement or suppression by the buyer.