CBIC clarifies certain issues related to Casual Taxable Persons and recovery of excess ITC distributed by an Input Service Distributor

Central Board of Indirect Taxes and Customs has issued Circular No. 71/45/2018-GST dated 26th October,2018 to clarify certain issues pertaining to registration as a casual taxable person and recovery of excess Input Tax Credit distributed by an Input Service distributor(ISD).

The issues raised and the clarifications on the same are listed in the below table :

Sl. no. Issues Clarifications
Whether the amount required to be deposited as advance tax while taking registration as a casual taxable person (CTP) should be 100% of the estimated gross tax liability or the estimated tax liability payable in cash should be calculated after deducting the due eligible ITC which might be available to CTP?
It is clarified that the amount of advance tax which a casual taxable person is required to deposit while obtaining registration should be calculated after considering the due eligible ITC which might be available to such taxable person.
2. As per section 27 of the Central Goods and Services Tax Act, 2017 (hereinafter referred to as the said Act), period of operation by causal taxable person is ninety days with provision for extension of same by the proper officer for a further period not exceeding ninety days. Various representations have been received for further extension of the said period beyond the period of 180 days, as mandated in law. It is clarified that in case of long running exhibitions (for a period more than 180 days), the taxable person cannot be treated as a CTP and thus such person would be required to obtain registration as a normal taxable person. While applying for normal registration the said person should upload a copy of the allotment letter granting him permission to use the premises for the exhibition and the allotment letter/consent letter shall be treated as the proper document as a proof for his place of business. In such cases payment of advance tax for the purpose of registration is not required. Such registration can be surrendered once the exhibition is over.
3. Representations have been received regarding the manner of recovery of excess credit distributed by an Input Service Distributor (ISD) in contravention of the provisions contained in section 20 of the CGST Act. In cases where the ISD distributes the credit resulting in excess distribution of credit to one or more recipients of credit, the excess credit so distributed shall be recovered from such recipients along with interest and penalty if any. The recipient unit(s) who have received excess credit from ISD may deposit the said excess amount voluntarily along with interest if any by using FORM GST DRC-03. If the said recipient unit(s) does not come forward voluntarily, necessary proceedings may be initiated against the said unit(s) under the provisions of section 73 or 74 of the CGST Act as the case may be. FORM GST DRC-07 can be used by the tax authorities in such cases. It is further clarified that the ISD would also be liable to a general penalty under the CGST Act.

Source: Central Board of Indirect Taxes and Customs

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