03 July 2018
Reversal of ITC is applicable even for free supply of services? As per my knowledge, Section 17(5)(h) covers only goods supplied as free samples. Further, supply of services to unrelated customers is not a supply. The same cannot be considered as exempted supply as well to attract Section 17(2) of CGST Act. Provide your views on the same.
Section 17(5)(h) reads as follows: Notwithstanding anything contained in Sec 16(1) and 18(1) , ITC shall not be available in respect of the foll....... (h) goods lost, stolen, destroyed, written off or disposed of by way of gift or free samples;
There are two aspects to be considered here. 1) This sub section doesnot cover services 2) Goods in subsection (h) can be interpreted as Inputs and not finished Goods as ITC is available only in respect of Input and not Finished Goods.
04 July 2018
ITC reversal is not applicable in case of supply of services. Further supply of services to unrelated persons for non-consideration is not a supply subject to levy u/7 and u/s 9 of CGST Act. Thus Section 17(2) for reversal of credit should not be applicable.
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